The South Caucasus3 is a land of ancient traditions and history. The valleys of the region represent a natural way of encounter and communication among three continents: Africa, Asia and Europe. South to the Tiger and Euphrates rivers and the Arabic peninsula, East into the Caspian region, North towards Eastern Europe and Russia, and westwards into the Black Sea and Mediterranean regions, the Caucasus is the natural convergence of all routes.

Over hundred of thousand of years, the first humanoid presence in the region evolved into human settlements that left abundant vestiges of ancient civilization, vestiges that are disseminated everywhere in those mountains and valleys. The Caucasus, thus, became the centre of a system of communications and a pole of civilization that progressed over the centuries combining land and sea transportation to favour exchange of cultures and promote trade of commodities. Recently, the same scheme became the fulcrum of a complex system of corridors that in today’s global economy are better known as TRACECA4.5

4 TRACECA is the highway of modern trade, combination of air, land and sea transportations.

The Southern Caucasus is a land of profound traditions, long history and natural beauty. Its mountains, rivers and cost-lines have observed human presence for over a million years. In fact, the valleys of this region represented and represent a natural way of encounter and communication among three continents: Africa, Asia and Europe. South to the Tiger and Euphrates rivers and the Arabic peninsula, East into the Caspian region, North toward Central Europe and Siberia, and West into the Black Sea and Mediterranean regions the Caucasus is the natural convergence of all routes. In fact, it is the only land passage among these territories. It is therefore natural that at the dawn of human presence on earth, the first primates coming from Africa transited these valleys in their quest toward new lands and opportunities.

Over hundred of thousand of years, the first humanoid presence in the region evolved
into human settlements that left abundant vestiges of ancient civilisations, vestiges that
are disseminated everywhere in these mountains and valleys. The Caucasus, thus,
became the centre of a system of communications and a pole of civilisation that
progressed over the centuries combining land and sea transportation to favour exchange
of cultures and promote trade of commodities. Recently, the same scheme became the fulcrum of a complex system of corridors that in today’s global economy are better known as TRACECA.

The entities that emerged in the South Caucasus after the Soviet collapse could barely be considered as states. Georgia, Armenia and Azerbaijan were recognized by the international community, and assumed the various responsibilities that accompany this process, such as seats in the United Nations General Assembly. But in practice, sovereignty hardly existed within the boundaries of these countries. In the first years following the Soviet collapse, Georgia suffered two conflicts with separatist regions (Abkhazia and South Ossetia)10 inside its borders, as well as civil war in late 1991. The writ of the Georgian state did not extend far beyond the administrative boundaries of the capital city, Tbilisi, which certainly had no monopoly over the legitimate use of force. Several armed militias vied for power, and parts of the country laid beyond the control of the government. [...]

The South Caucasian countries have come along the way since the early 1990s. Constitutions have been ratified, electoral processes regularized and armed militia groups reigned in. In 2003, the so called Rose Revolution marked the strength of Georgian society as much as the weakness of the state. As Lynch declares, Civil-military relations are poor in each South Caucasus state, either because the military plays too strong role in politics or because [the civilian leadership has purposefully sought to weaken the armed forces.]

10 To get introduced with short historical overviews and present situations of the conflicts, please see the appendix 2 p.170

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The entities that emerged from the Soviet collapse could barely be considered ‘states’. Georgia, Armenian and Azerbaijan were recognised by the international community, and assumed the various responsibilities that accompany this process, such as seats in the United Nations General Assembly. In practice, sovereignty hardly existed within the boundaries of these states. Nowhere was this more evident than in Georgia in 1992-93. In the first years following the Soviet collapse, Georgia suffered two conflicts with separatist regions (Abkhazia and South Ossetia) inside its borders, as well as two quasi-civil wars (in late 1991 and autumn 1993). The writ of the Georgian state did not extend far beyond the administrative boundaries of the capital city, Tbilisi, which certainly had no monopoly over the legitimate use of force, to use Max Weber’s definition of the attributes of the modern state. Several armed militias vied for power, and parts of the country lay beyond the control of the government. [...]

The South Caucasian states have come along way since the early 1990s. Constitutions have been ratified, electoral processes regularised and armed militia groups (for the most part) reined in. [...] The ‘Rose

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Revolution’ marked the strength of Georgian society as much as the weakness of the state. Civil-military relations are poor in each of them, either because the military plays too strong a role in politics or because the civilian leadership has purposefully sought to weaken the armed forces.

[As Lynch declares, Civil-military relations are poor in each South Caucasus state, either because the military plays too strong role in politics or because] the civilian leadership has purposefully sought to weaken the armed forces. Both Azerbaijan and Georgia have seen unrest in their armed forces because of the conditions of service and the lack of funding by the government. Relations between the central governments in the capitals and the regions were also troubled. The capital cities have attracted all of the pledged investments, which made the gap with the surrounding regions wide. On a daily level, an individual’s interaction with the state is distinctly predatory: either one has a position/function, in which the resources of the state may be captured for private use, or one has to apply various forms of state rent-seeking behaviour. Lynch says that the institutional weakness of the South Caucasian is a vicious circle: the governments suffer from very low levels of tax collection, which provides little revenue for the provision of public services in health care and education, the latter creates greater public discontent as well as incentives for corruption – all these decrease popular willingness to pay taxes.12

The weakness of the South Caucasian states is evident also in the large proportion of their populations who have left their countries to work abroad as economic migrants. The figures vary between ten to twenty percent of the working population who left mainly for Russia. This trend reflects the lack of professional opportunity available in the region. It may also illustrate a deep-seated perception of illegitimacy of the states that have arisen in the last ten years.13

Civil-military relations are poor in each of them, either because the military plays too strong a role in politics or because the civilian leadership has purposefully sought to weaken the armed forces. Both Azerbaijan and Georgia have seen unrest in their armed forces because of the conditions of service and the lack of funding by the government. Relations between the central governments in the capitals and the regions are also troubled. In general, the capital cities have attracted all of the (little) investment that has been made over the last decade, and the gap with the surrounding regions is wide. On a daily level, the individual’s interaction with the state is distinctly predatory: either one has a position/function, in which the resources of the state may be captured for private use or one ends up on the receiving end of various forms of state rent-seeking. The institutional weakness of the South Caucasian is a vicious circle: the governments suffer from very low levels of tax collection, which provides little revenue for the provision of public services in health care and education, which creates greater public discontent as well as incentives for corruption – all of which decrease popular willingness to pay taxes.

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The weakness of the South Caucasian states (as opposed to nations) is evident also in the large proportion of their populations who have left their countries to work abroad as economic migrants. The figures vary between ten to twenty per cent of the working populations who have left, mainly for Russia. This trend reflects the lack of professional opportunity available in the South Caucasus. It may also illustrate a deep-seated perception of the illegitimacy of the states that have arisen in the last ten years.

The abovementioned situation in the South Caucasus gave a good ground for crime expansion which is quite multifaceted in the region involving issues posing a mainly economic threat, such as smuggling of alcohol, cigarettes and fuel; but also issues with much wider implications, such as the smuggling of narcotics, weapons, persons and components of weapons of mass destruction (WMD). The consequences of crime in the South Caucasus affect both the region itself and Europe. Cornell states: as criminal networks entrench their influence over the economic and political elites of the states in the region, they become increasingly powerful actors which have a clearly destabilizing effect on these societies.

The growing threat of transnational crime

[...]

Transnational crime in the South Caucasus is multifaceted, involving issues posing a mainly economic threat, such as the smuggling of alcohol, cigarettes and fuel; but also issues with much wider implications, such as the smuggling of narcotics, weapons, persons
and components of weapons of mass destruction (WMD).1 The consequences of crime in the South Caucasus affect both the region itself and Europe. As criminal networks entrench their influence over the economic and political élites of the states in the region, they become increasingly powerful actors in the region, and this has a clearly destabilising effect on these societies.

1. See Cornell Caspian Consulting, ‘The South Caucasus: A Regional Overview and Conflict Assessment’, a report prepared for the Swedish Agency for International Development Cooperation, Stockholm, August 2002, pp. 50-2, 60-1.

Since the collapse of the Soviet Union, transnational crime has gradually grown in importance in all the former Soviet states. Following Cornell’s analysis, several factors common to those states have made this very rapid growth of transnational organized crime possible. First factor is the weakness of state structures; second, the economic recession that followed the collapse of the Soviet Union, and the failure of the most former Soviet states to generate sustainable economic development; third, the former Soviet space is auspiciously located between the source of illicit drugs, especially the opiates produced in Afghanistan, and their main market – Europe. Moreover, state institutions have proven to be malleable to corruption. Cornell says that in countries such as Georgia or Tajikistan, officials at the highest levels have leading role in organized crime.14

Given the global convergence of separatism and/or extremism with crime, the persistence in the South Caucasus of armed ethnic separatism and uncontrolled territories is a priori a facilitating factor for crime. The links between separatist and extremist political groups on the one hand and transnational crime on the other are plentiful in the region; such groupings typically turn to crime to finance their ideological struggle, no doubt attracted by the large sums of money to be made as well. Cornell gives the instance of the war in Chechnya throughout the 1990s. Chechnya and Dagestan both saw a boom in organized crime, including the smuggling of arms, drugs and other commodities, and abductions of people for ransom. Criminal groups operating in the North Caucasus have spilled over into the South Caucasus, for example in the Pankisi Gorge in Georgia, and also in Azerbaijan, where the influx of Chechen refugees and the proximity to criminalized and troubled Dagestan has facilitated the presence of criminal networks with links to the North Caucasus.15

So, crime is directly connected to the deadlocked armed conflicts of the South Caucasus, which highlights the dangers posed to the international community by separatist ethnic conflicts and resulting state weakness in the region. Breakaway areas such as Nagorno-Karabakh, Abkhazia and South Ossetia, have been credibly and directly implicated in transnational criminal activities. Moreover, as Cornell declares, the separatist areas should not shoulder the blame alone. Just as Chechnya would never have become a hub for smuggling in 1991-94 without criminal links to the Russian government; in the same way the separatist regions of the South Caucasus could never have become hotbeds of crime if they were not have been permeated by the same phenomenon.

14 Ditrich Ondrej – New Threats in Central Asia and the Caucasus and European Security. Association for International Affairs. Praha 11/2006. pp. 3-4. See also: Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.24

15 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.28

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Since the collapse of the Soviet Union, transnational crime has gradually grown in importance in all former Soviet states. [...] Several factors common to the former Soviet states have

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made this very rapid growth of transnational organised crime possible.

A first factor is the weakness of state structures. [...]

Second, the economic recession that followed the collapse of the Soviet Union, and the failure of most former Soviet states to generate sustainable economic development, limited the venues for legal economic activity – thereby increasing the opportunities for illegal economic activity, and especially organised crime.

Third, the former Soviet ‘space’ is auspiciously located between the source of illicit drugs, especially the opiates produced in Afghanistan, and their main market, Europe. Moreover, [...]

Fourth, and related to the previous factors, state institutions have proven to be malleable to corruption, and furthermore to direct infiltration by transnational criminal groupings.

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In countries such as Georgia or Tajikistan, credible allegations have lingered of officials at the highest levels having leading roles in organised crime. [...]

[...]

The links between separatist and extremist political groups on the one hand and transnational crime on the other in the region are plentiful, yet the factor of crime in understanding these groupings and their interests is scarcely studied. [...] Such groupings typically turn to crime to finance their ideological struggle, and due to their already underground status as well as their needs they tap the criminal market to obtain weapons. [...] In other words, as the struggle extends in time, parts of the leaderships of ideologically motivated groups tend to turn to crime, no doubt attracted by the large sums of money to be made.

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Given the global convergence of separatism and/or extremism with crime, the persistence in the South Caucasus of armed ethnic separatism and uncontrolled territories is a priori a facilitating factor for crime.

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Instability in the North Caucasus is another issue that has exacerbated the situation in the South Caucasus, especially the destabilising effect of the war in Chechnya. Throughout the 1990s, Chechnya and Dagestan both saw a boom in organised crime, including the smuggling of arms, drugs and other commodities, and abductions of people for ransom. Criminal groups operating in the North Caucasus have spilled over into the South Caucasus, for example in the Pankisi Gorge in Georgia, and also in Azerbaijan, where the influx of Chechen refugees and the proximity to criminalised and troubled Dagestan has facilitated the presence of criminal networks with links to the North Caucasus.

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Crime is directly connected to the deadlocked armed conflicts of the South Caucasus, which highlights the dangers posed to the international community by separatist ethnic conflict and resulting state weakness in the region. Breakaway areas such as Nagorno-Karabakh, Abkhazia and South Ossetia, as well as areas virtually outside state control in practice, such as Adzharia, have been credibly and directly implicated in transnational criminal activities. Moreover, the separatist areas should not shoulder the blame alone. Just as Chechnya would never have become a hub for smuggling in 1991-94 without criminal links to the Russian government, in the same way the separatist regions of the South Caucasus could never have become hotbeds of crime if the recognised states of the region were not permeated by the same phenomenon.

[At the same time, there is no doubt that the] persistence of unresolved conflicts increases the attractiveness of the South Caucasus for transnational criminal networks. Moreover, crime creates incentives on both sides of the deadlocked conflicts to preserve the status quo, and this is immensely detrimental to most people in the region, but at the same time beneficial to those profiting from crime.

The drug trade is the leading business in transnational organized crime, primarily because it is where the largest profits are made. But, Cornell argues that the drug trade is by no means the only international criminal activity in the Caucasus. The smuggling of small and heavy weapons, as well as materials for WMD, also happens there. The region figures in the North-South direction with the smuggling of arms and WMD components from Russia to the Middle East; in the East-West direction with the smuggling of arms from Asia to Europe; and in the South-North direction with the smuggling of small amounts of sophisticated weaponry to Chechnya.16

Following Cornell, criminal networks also challenge state control over territory. As the example of the Pankisi Gorge illustrates, a lack of control also endangers the Caucasian states’ relations with their neighbours. Crime also influences the effectiveness of foreign, security and aid policies of Western states towards the South Caucasus and is a problem that should be incorporated into those policies in order for them to become effective in achieving their stated aim of improving security and economic development in the region.

The abovementioned simply illustrates how transnational crime could be a potent factor effecting the political and economic future of the South Caucasus.

16 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.35

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The drug trade is the leading business in transnational organised crime, primarily because it is where the largest profits are made.

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The drug trade is by no means the only international criminal activity in the Caucasus. The smuggling of small and heavy weapons, as well as materials for WMD, also happens in the region. As with the drug trade, the weakness of law enforcement and the geographic
location of the Caucasus combine to make the area an important transhipment point. But unlike the drug trade, the Caucasus figures in the north-south direction, with the smuggling of arms and WMD components from Russia to the Middle East; in the east-west
direction, with the smuggling of arms from Asia to Europe; and in the south-north direction, with the smuggling of small amounts of sophisticated weaponry to Chechnya.

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Criminal networks also challenge state control over territory, as the example of the Pankisi Gorge illustrates, a lack of control that also endangers the Caucasian states’ relations with their neighbours. [...]

[...]

That said, there is no doubt that the persistence of unresolved conflicts increases the attractiveness of the South Caucasus for transnational criminal networks. Moreover, crime creates incentives on both sides of the deadlocked conflicts to preserve the status quo, and this is immensely detrimental to most people in the region but at the same time beneficial to those profiting from crime. [...] Transnational crime also affects the effectiveness of foreign, security and aid policies of Western states towards the South
Caucasus and is a problem that should be incorporated into those policies in order for them to become effective in achieving their stated aim of improving security and economic development in the region.

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While speculative, this simply illustrates how transnational crime could be a potent factor affecting the political and economic future of the South Caucasus.

The Caspian is important because it is one of the world’s major producing areas in which actual oil production remains essentially in the hands of market-oriented international energy companies. Its particular importance to Europe is that the most of the additional Caspian oil and gas output is to move westwards to European and Mediterranean markets, although some oil will move by tankers to the giant US East Coast market.

The Caspian is important not because it is one of the world’s major producing areas, but because it is likely to become one of the biggest producing areas in the world in which actual oil production remains essentially in the hands of market-oriented international energy companies. Its particular importance to Europe is that most of the additional Caspian oil and gas output is likely to move westwards to European and Mediterranean markets, although some oil will move by tanker to the giant US East Coast market.

Since, Azerbaijan, Kazakhstan and Turkmenistan secured their independence amidst the collapse of the Soviet Union, only a couple of major new oil and gas pipelines were completed. Among them are: the Caspian Pipeline Consortium’s 567,000 b/d (barrel per day) system that links Tengiz and Atyrau in Kazakhstan with the Russian Black Sea port of Novorossiysk; the 1.0 mb/d (million barrel per day), $2.95 billion Baku-Tbilisi-Ceyhan (BTC) pipeline, which carries oil from Baku to the Turkish Mediterranean port of Ceyhan; the other is its twin: a $1 billion gas line that runs parallel to BTC from Baku to the environs of the Turkish city of Erzurum, where it joins Turkey’s main east-west gas line.20

20 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.92

The 12 years since Azerbaijan, Kazakhstan and Turkmenistan secured their independence amidst the collapse of the Soviet Union have so far resulted in the completion of just one major new oil pipeline, the Caspian Pipeline Consortium’s 567,000 b/d system that links Tengiz and Atyrau in Kazakhstan with the Russian Black Sea port of Novorossiysk. However, official starts have now been made on two more major new pipeline projects, One is the 1.0 mb/d, $2.95 bn Baky-Tbilisi-Ceyhan (BTC) pipeline which will carry Azerbaijani and perhaps Kazakh crude to the Turkish Mediterranean port of Ceyhan, the other is its twin: a $1 bn gasline that will run parallel to BTC from Baky to the environs of the Turkish city of Erzurum, where it will join Turkey’s already built main east-west gasline.

As John Roberts indicates, the EU is heavily dependent on energy imports, particularly in oil, but its position is somewhat ameliorated by the fact that well over 20 per cent of its oil imports come from Norway. Overall, in 2000, the EU was dependent on imports (including supplies from Norway) to meet some 75 per cent of its oil requirements. By 2030 it is expected to be 85 per cent dependent on oil imports. According to the European Commission’s Green Paper, Towards a European Strategy for the Security of Energy Supply, adopted in November 2000 and published in 2001 - which in places tends to lump Norwegian production in with EU North Sea oil output - the EU anticipates that oil demand will rise from around 12 mb/d (million barrel per day) in 2000 to some 13.2 mb/d in 2030. At the same time, its principal domestic and near-domestic sources of crude oil - the North Sea (including Norway) and internal production in various EU member states - is expected to fall from around 7.0 to 6.0 mb/d. In effect, the EU will move to much the same condition as the United States is in today - reliance on (non-Norwegian) imports to meet around 60 per cent of its oil needs.22

22 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.97

The EU is heavily dependent on energy imports, particularly in oil, but its position is somewhat ameliorated by the fact that well over 20 per cent of its oil imports come from Norway.

Overall, in 2000, the EU was dependent on imports (including supplies from Norway) to meet some 75 per cent of its oil requirements; by 2030 it is expected to be 85 per cent dependent on oil imports. According to the European Commission’s Green Paper, Towards a European Strategy for the Security of Energy Supply, adopted in November 2000 and published in 2001 – which in places tends to lump Norwegian production in with EU North Sea oil output – the EU anticipates that oil demand will rise from around 12 mb/d in 2000 to some 13.2 mb/d in 2030.1 At the same time, its principal domestic and near-domestic sources of crude oil – the North Sea (including Norway) and internal production in various EU member states – is expected to fall from around 7.0 to 6.0 mb/d. In effect, the EU will move to much the same condition as the United States is in today – reliance on (non-Norwegian) imports to meet around 60 per cent of its oil needs.

The predominance of Russia must be seen in the context of a growing counter veiling engagement of the USA and NATO in the region. Azerbaijan and Georgia have both indicated interest in a possible NATO membership and expressed their wish to see the deployment of NATO troops as a support to resolve the conflicts. The primary interest of the USA, apart from demonstrating a strong anti-Russian presence in the Caspian region, lies in the oil and gas reserves and supply of the world markets with energetic resources by circumventing Russia and Iran. In this respect, the construction of the Baku-Ceyhan oil pipeline and the Transcaspi-oil/gaspipeline is to be taken into account. Georgia, as the transit country with access to the Black Sea is playing its part in the “great game”.

The predominance of Russia must be seen in the context of a growing counterveiling engagement of the USA and NATO in the region. Azerbaijan and Georgia have both indicated interest in a possible NATO membership and expressed their wish to see the deployment of NATO troops as a support to resolve the various conflicts. The primary interest of the USA, apart from demonstrating a strong anti-Russian presence in the Caspian region, lies in the oil and gas reserves (in southern Azerbaijan, Kazakhstan and Turkmenistan in Central Asia) and supply of the world markets by circumventing Russia and Iran. In this respect, the construction of the Baku-Ceyhan oil pipeline and the Transcaspi-oil/gaspipeline by the US is to be taken into account, although the de facto existing oil reserves are often exaggerated. Georgia, as the only country in the region with access to the sea is playing a major role.

51 At the Prague summit, NATO launched the Individual Partnership Action Plan (IPAP), an individual cooperation plan designed specifically for each individual partner and intended “to prioritise, harmonise and organise all aspects of the NATO-Partner relationship in the Euro-Atlantic Partnership Council (EAPC) and PfP framework”. Azerbaijan and Georgia are part of this program. See Prague Summit declaration - http://www.nato.int/docu/pr/2002/p02-127e.htm. (12.12.2007)

At the Prague summit, NATO launched the Individual Partnership Action Plan (IPAP), an individual cooperation plan designed specifically for each individual partner and intended ‘to prioritise, harmonise and organise all aspects of the NATO-Partner relationship in the Euro-Atlantic Partnership Council (EAPC) and PfP framework’.44 Azerbaijan and Georgia formally applied for IPAP in 2003 and their applications are currently under consideration.

Armenia’s cooperation with NATO remained more limited than it of Georgia and Azerbaijan, partly because of its reliance on Russia for military assistance and partly because of its poor relations with Turkey, a NATO member state and neighbour. However, after Javier Solana’s visit to Yerevan in February 1997, Armenia decided to enhance its cooperation with NATO by participating in military training exercises and developing a peacekeeping contingent to participate in UN operations. As a result of increased US military assistance to Azerbaijan after the 11th September, Armenia decided to expand its cooperation with NATO, and expressed its desire to hold a NATO PfP exercise in 2003; and to obtain NATO assistance in the areas of civil emergency planning and peacekeeping.50

50 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. pp. 83-84

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Armenia’s cooperation with NATO remained more limited, partly because of its reliance on Russia for military assistance and partly because of its poor relations with Turkey, a NATO member state and neighbour. However, after Javier Solana’s visit to Yerevan in February 1997, Armenia decided to enhance its cooperation with NATO by participating in military training exercises and developing a peacekeeping contingent to participate in UN operations.42

[...] As a result of increased US military assistance to Azerbaijan after 11 September, Armenia decided to

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expand its cooperation with NATO, and expressed its desire to hold a NATO PfP exercise in 2003 and to obtain NATO assistance in the areas of civil emergency planning and peacekeeping.43

At the same time, NATO’s such a close cooperation with Georgia and Azerbaijan, created high expectations of the countries’ governments that NATO would resolve their security challenges. However, it was confusion that NATO would become the new guarantor of peace and security in the region, or even, would assist in the resolution of the Nagorno-Karabakh, Abkhaz or South Ossetian conflicts.

NATO has regularly condemned the use of force in the region and expressed its support for the territorial integrity of the South Caucasian states. However, NATO countries have refrained from getting directly involved in conflict resolution, deferring to other international organizations such as the OSCE or the UN. Not only did NATO not intervene to stop the violence or to impose a settlement in Nagorno-Karabakh, South Ossetia and Abkhazia, as it did in Bosnia and Kosovo, but it has not become involved in peacekeeping operations at all along the various cease-fire lines. In all fairness, it must be said that when these conflicts erupted, NATO did not yet have a mandate to intervene in out-of-area operations and conduct peace support operations. It took three years of bloody fighting and ethnic cleansing in Bosnia for NATO to conduct its first air strikes against Serb positions in the summer 1995.

Despite NATO’s positive and increased involvement in the region, major shortcomings remain. First of all, NATO managed to address only peripherally the main security threats and challenges effecting countries in the region - i.e. unresolved conflicts, open borders, weak and corrupt state structures, inefficient armed forces, and arms and drug smuggling. NATO’s limited involvement in the South Caucasus, especially as far as peace support operations are concerned, contrasts sharply with the organization’s deep involvement in other parts of Europe, particularly in former Yugoslavia. Only more recently, and within the context of the war on terror, have crucial security issues been addressed, such as the enhancement of border controls. Despite their high value, the NATO PfP and IPAP programs remain limited instruments for resolving the region’s pressing security needs.

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Despite NATO’s positive and increased involvement in the region, major shortcomings remain. First of all, NATO managed to address only peripherally the main security threats and challenges affecting countries in the region – i.e. unresolved conflicts, open borders, weak and corrupt state structures, inefficient armed forces, and arms and drug smuggling. NATO’s limited involvement in the South Caucasus, especially as far as peace support operations are concerned, contrasts sharply with the organisation’s deep involvement in other parts of Europe, particularly in former Yugoslavia. Only more recently, and within the context of the war on terror, have crucial security issues been addressed, such as the enhancement of border controls. Their high value notwithstanding,
NATO’s PfP programme and the EAPC remain limited instruments for resolving the region’s pressing security needs, in spite of NATO’s efforts to improve the countries’ military and
security structures.

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This – rightly or wrongly – created high expectations among partner countries, especially Georgia and Azerbaijan, that NATO would resolve their security challenges. [...] Such cooperation has led to confusion and created great expectations among South Caucasian states that NATO would become the new guarantor of peace and security in the region and even assist in the resolution of the Nagorno-Karabakh, Abkhaz and South Ossetian conflicts.

NATO has regularly condemned the use of force in the region and expressed its support for the territorial integrity of the South Caucasian states. However, NATO countries have refrained from getting directly involved in conflict resolution, deferring to other
international organisations such as the OSCE or the UN for the peaceful resolution of the disputes. Not only did NATO not intervene to stop the violence or to impose a settlement in Nagorno-Karabakh, South Ossetia or Abkhazia, as it did in Bosnia and Kosovo, it has not become involved in peacekeeping operations along the various cease-fire lines. In all fairness, it must be said that when these conflicts erupted NATO did not yet have a mandate to intervene in out-of-area operations and conduct peace support operations. It took three years of bloody fighting and ethnic cleansing in Bosnia for NATO to conduct its first air strikes against Serb positions in the summer of 1995.

As Brenda Schaffer (Diplomatic Academy Vienna) declares, Washington views the US presence and policy in the South Caucasus as a component of its larger Middle East and anti-terrorism policies. Washington has viewed the energy resources of Azerbaijan in two ways: firstly, as a contributor to global oil supply diversification, and secondly, as oil in the margins (an effective tool for lowering oil prices). As to the Armenia-Azeri case, she argues that domestic interest groups, especially the Armenian-American lobby, through influence over Congressional decisions have had a large impact on the formation of current US policy towards the region. At the urging of the American-Armenian lobby, Congress imposed sanctions on Azerbaijan in 1992 in the form of Section 907 of the Freedom Support Act that barred direct government-to-government assistance. Following the September 11th, the US administration has waived the Congressional sanctions on Azerbaijan. Many in Azerbaijan felt that the sanctions were waived by the US only in order to take advantage of Azeri airspace and bases concerning the Iraqi crisis and confrontations with Iran.

Here would be also worth to mention that despite the increased activism, US policy towards the region continues to be contradictory and inconsistent due to the often conflicting policy directions of different arms of the US government - mainly the congressional versus the executive branch. For instance, despite the long-standing promotion by US officials of the BTC pipeline, Congressional members who receive considerable support from the American-Armenian community tried to frustrate this project. Moreover, congressionally allocated aid to Armenia is still the highest per capita of all the former Soviet states despite Yerevan’s strong cooperation with states of concern to the United States such as Iran and Syria not to mention the latter’s close relations with Russia. At the same time, the United States joined efforts in the OSCE Minsk Group, which has led the external efforts aimed at resolving the Nagorno-Karabakh conflict.57

57 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. pp.53-59

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As a whole, Washington now views the US presence and policy in this region as a component of its larger Middle East and anti-terrorism policies. In addition, since the late 1990s – especially in the post-11 September 2001 era – the United States has viewed the energy resources of Azerbaijan in two ways: first, as a contributor to global oil supply diversification and second, as oil in the margins (an effective tool for lowering oil prices). [...] Domestic interest groups, especially the Armenian-American lobby, through influence over Congressional decisions have had a large impact on the formation of current US policy towards the region, often in contradiction to policies articulated by agencies of the US executive branch.

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At the urging of the American-Armenian lobby, Congress imposed sanctions on Azerbaijan in 1992 in the form of Section 907 of the Freedom Support Act. Up until the presidential waiver in 2002, this legislation barred direct government-to-government aid between Washington and Baky and constituted a major constraint on US policy options towards the region.1

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Additionally, the United States joined efforts in the OSCE Minsk Group, which has led the external efforts aimed at resolving the Nagorno-Karabakh conflict.

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Washington’s shift in priorities following 11 September gave the Administration the political will and power to waive the Congressional sanctions on Azerbaijan. [...] Many in Azerbaijan felt that the sanctions were waived only in order for the United States to take advantage of Azerbaijan’s airspace and bases – not as a reflection of a true policy shift.

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Despite the increased activism, US policy towards the region continues to be contradictory and inconsistent due to the often conflicting policy directions of different arms of the US government – mainly the congressional versus the executive branch. For instance, despite the long-standing promotion by US officials of the BTC pipeline, Congressional members who receive considerable support from the American-Armenian community still try to frustrate this project. Moreover, congressionally allocated aid to Armenia is still the highest per capita of all the former Soviet states, despite Yerevan’s strong cooperation with states of concern to the United States, such as Iran and Syria.

1. Section 907 prohibits US assistance (with the exception of humanitarian assistance and assistance for non-proliferation and disarmament programmes) to the government of Azerbaijan under the Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992 (also known as the Freedom Support Act) ‘until the President determines, and so reports to the Congress, that the Government of Azerbaijan is taking demonstrable steps to cease all blockades and other offensive uses of force against Armenia and Nagorno-Karabakh.’ The legislation imposes sanctions only on Azerbaijan, despite the fact that both Armenia and Azerbaijan waged a war over the territory of Nagorno-Karabakh.

As Schaffer suggests, a strong motivating factor in the US decision to promote the BTC pipeline was the anticipated economic benefits for Turkey as well as the desire to link Turkey to the states of the Caucasus and avoid a crisis in the Bosporus by not increasing tanker traffic from the Caspian region. Washington gave the Republic of Georgia special attention and promoted more cooperation with Tbilisi than with neighbouring Armenia and Azerbaijan. The special policy towards Tbilisi is motivated by Georgia’s strategic geographic location on the Black Sea, which confers a pivotal role in the region’s development. Moreover, the special treatment of Georgia may have emanated from the fact that relations with Georgia were less controversial from the US domestic perspective than relations with either Armenia or Azerbaijan.

In addition, it can be argued that Washington seemed to support Georgia’s defiant stance towards Moscow directly or indirectly. It is to be mentioned as well, that although Russia’s policies regarding Georgia were an issue of contention between Washington and Moscow, they were not a central point of discussions held on Russia/US summits or other meetings until the Russia-Georgian war of 2008.

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A strong motivating factor in the US decision to promote the Baky-Tbilisi-Ceyhan pipeline was the anticipated economic

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benefits for Turkey as well as the desire to link Turkey to the states of the Caucasus and avoid a crisis in the Bosphorus by not increasing tanker traffic from the Caspian region. [...]

Washington gave the Republic of Georgia special attention and promoted more cooperation with Tbilisi than with neighbouring Armenia and Azerbaijan. The special policy towards Tbilisi is motivated by Georgia’s strategic geographic location on the Black Sea, which confers a pivotal role in the region’s developments. Moreover, the special treatment of Georgia may have emanated from the fact that relations with Georgia were less controversial from a US domestic perspective than relations with either Armenia or Azerbaijan. In addition, Washington seemed to support Georgia’s defiant stance towards Moscow.

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Russia’s policies regarding Georgia were an issue of contention between Washington and Moscow, but were not a central point of discussion in their summits or other meetings.

The NATO has been hampered in its efforts to address the security challenges by a series of factors: the limitation of mandates, lack of adequate resources, internal disagreements among member states and the absence of strong political will to become more deeply engaged in the region. The west has tended to devote most of its attention to other regions of the world, such as the Balkans, Central Europe, etc; and has failed to devote to the [South Caucasian region the attention and resources it requires.]

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International organisations such as NATO, the UN and the OSCE have been hampered in their efforts to address the security challenges by a series of factors: the limitation of their mandates, their lack of adequate resources, internal disagreements among member states and the absence of strong political will among member countries of the various organisations to become more deeply engaged in the

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region. These organisations have tended to devote most of their attention to other regions of the world, such as the Balkans, Central and Eastern Europe or Africa, and have failed to devote to the South Caucasian region the attention and resources it requires.

[The west has tended to devote most of its attention to other regions of the world, such as the Balkans, Central Europe, etc; and has failed to devote to the] South Caucasian region the attention and resources it requires. However, it would be unfair to place the blame for the difficulties faced by the region entirely on the west. The three South Caucasian states bear the greatest share of responsibility for the outbreak of the various conflicts and for failing to resolve their most pressing security needs.

These organisations have tended to devote most of their attention to other regions of the world, such as the Balkans, Central and Eastern Europe or Africa, and have failed to devote to the South Caucasian region the attention and resources it requires.

However, it would be unfair to place the blame for the difficulties faced by the region entirely on the international organisations. The three South Caucasian states bear the greatest share of responsibility for the outbreak of the various conflicts and for failing
to resolve their most pressing security needs.

“The EU is in itself a peace project and a supremely successful one ... Through the process of enlargement, through the Common Foreign and Security Policy, through its development co-operation and its external assistance programmes the EU now seeks to project stability also beyond its own borders. (Commission 200k 5).”58]

The end of the Cold War had great significance for the evolution of the EU as a global actor, mostly because of the new demands coming from Central and East European countries. As Bretherton and Vogler argue,59 bipolarity doubtless permitted, and economic globalization encouraged, the development of cooperation in Europe. However, the European Union as a political form is unique; its creation reflect [sic] a combination of external demands and opportunities, and political will and imagination on the part of its founders. It is a moving target under construction that can frustrate the best efforts of an analyst.

The Treaty on European Union (TEU) which entered into force in 1993, have had undoubtedly importance for the development of the European Union as a global actor. At the same time, attempts were made to develop Common Foreign and Security Policy (CFSP) for the newly created Union, and thus, give a political direction to external policy.

In 1999 the Treaty of Amsterdam (TOA) provided the CFSP with a new position of High Representative, which was filled in by Mr. Javier Solana. Afterwards, in 2003, the Treaty of Nice strengthened the institutional structure of the CFSP by creating the European Security and Defence Policy (ESDP).

Karen Smith identifies the following characteristics of the European Union in International relations: promotion of regional cooperation, human rights, democracy/good governance, conflict prevention and fight against international crime.60

[In order better to understand the EU’s commitment to act as a global actor, we should treat the whole political situation from the international perspective by that time. Many factors have forced the European Community (EC) to become an international political actor.] The end of the Cold War has emerged the European Union’s new role in challenging US hegemony. The EU had to compete with the US and Japan in high technology through the single market program and subsequently the Lisbon Strategy.

58 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.189

59 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.20

60 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.12

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While habits of cooperation were established among Member State foreign ministers, diplomats and officials, it was not until the end of the Cold War, followed by entry into force of the Treaty on European Union in 1993, that attempts were made to develop a Common Foreign and Security Policy (CFSP) for the newly created European Union, and thus to give overall political direction to external policy.

The TEU undoubtedly had importance for the development of the Union’s roles as a global actor.

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Disappointment with the functioning of the CFSP led to Treaty reform, most notably through the 1999 Treaty of Amsterdam (TOA). The TOA provided for a new position, of High Representative for the CFSP, which was filled by Javier Solana. [...]

[...] Subsequently the 2003 Treaty of Nice strengthened the institutional structure of the CFSP and formalized arrangements that would give effect to the military and policing instruments of the ESDP. [...]

[...] The end of the Cold War had great significance for the evolution of the EU as a global actor, most evidently in terms of the new and unprecedented demands emanating from Central and East European countries (CEEC), eight of which became Member States in 2004.

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Similarly, Karen Smith focuses upon ‘what the EU actually does in international relations’ - which she identifies as promotion of regional cooperation, human rights, and democracy/good governance; conflict prevention and the fight against international crime (Smith 2003: 2 and passim).

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Here a contemporary role for the EU emerges in maximizing the potential of Western European states in challenging US hegemony. Attempts by the Union to compete with the US and Japan in high technology, through the Single Market programme and subsequently the Lisbon Strategy, [may be portrayed in Wallerstein’s terms (1991: 55) as a struggle ‘to gain monopolistic edges that will guarantee the direction of flows of surplus ... clearly it must be of concern to Europe that she will come a poor second in the race’.8]

[8 It is interesting to note that Wallerstein speculated in 1988 (when his 1991 essay was originally published) about the possibilities for and implications of ‘European unity’ through EC enlargement to the East. This, he concluded, would ‘breathe considerable new life into the existing capitalist world-economy’ (1991: 63).]

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Bipolarity doubtless permitted, and economic globalization encouraged, the development of cooperation in Europe. However, the European Union as a political form is unique; its creation reflects a combination of external demands and opportunities, and political will and imagination on the part of its founders.

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[8 The EU as a security community and military actor

[...]

The EU is in itself a peace project and a supremely successful one ... Through the process of enlargement, through the Common Foreign and Security Policy, through its development co-operation and its external assistance programmes the EU now seeks to project stability also beyond its own borders.

(Commission 2001c: 5)]

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The European Union is a political system under construction — a moving target that can frustrate the best efforts of the analyst.

[Besides, the emergence of] armed conflict in Europe in the early 1990s, and fears of widespread political instability in Eastern Europe suggested a significant role for the EU as a regional security actor.

To facilitate more sustained diplomacy, the Union has developed some foreign policy instruments. Appointment of the EU Special Representatives to areas of particular concern such as the Balkans, the Middle East, the Great Lakes region of Africa and Afghanistan, later the South Caucasus, was very good initiative in order to stabilize the regions. Besides, the Commission operates an external service with some 130 delegations in less developed countries of the EU concern. They do not operate as a traditional foreign service however. Arguably, political reporting is often very weak and the focus of delegations, reflecting the principal areas of Community competence, has been first on trade, second on aid and only third on CFSP.61 [This is truth for the South Caucasus region as well. I will examine this problem thoroughly later in the work.

Moravcsik says that the single most powerful policy instrument of the EU for promoting peace and security in the world today is the ultimate in market access.62]

61 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.33

[62 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.59]

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The re-emergence of armed conflict in Europe in the early 1990s, and fears of widespread political instability in Eastern Europe, suggested a significant role for the EU as a regional security actor.

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To facilitate more sustained diplomacy on behalf of the Union, the practice has developed of appointing EU Special Representatives to areas of particular concern such as the Balkans, the Middle East, the Great Lakes region of Africa and Afghanistan.

In addition to these CFSP instruments, the Commission operates an external service with some 130 delegations in third countries. They do not operate as a traditional foreign service, however. Political reporting is often Very weak’ and the focus of delegations, reflecting the principal areas of Community competence, has been ‘first on trade, second on aid and only third on CFSP’ (Interview, DG External Relations, July 2001).

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[An American scholar makes even stronger claims for the Union as civilian power; indeed he posits a direct link between inclusive and exclusive facets of EU identity:

Arguably the single most powerful policy instrument for promoting peace and security in the world today, is the ultimate in market access: admission to or association with the EU trading bloc.

[“The peaceful revolution which swept Eastern Europe in 1989 is probably the most significant event in global terms of the past 45 years. It is happening on the very doorstep of the European Community. It represents a challenge and an opportunity to which the EC has given an immediate response.” (Commission 1990b:5).63]

Success in developing mutually satisfactory relations with neighbours and (potential) candidates is of paramount importance to the enlarged Union. Both the Eastern and Southern peripheries are characterized by economic and political instability and bitter, unresolved conflicts. As a consequence, both are identified in the Union’s Security Strategy as potential sources of risk to European security. Both, too, are important in supply or transit of energy to the EU. While the Security Strategy makes clear the Union’s interest in surrounding itself with a ring of well governed countries, the principal discourses employed within the Union have not been of security and interest, but of inclusion and neighbourhood. Rhetorically, at least, the central aim of the Union is to extend to the East and the South its values and practices and hence stability and prosperity. This is to be achieved either through incorporation (the Western Balkans and possibly Turkey) or neighbourhood (NIS64 and MNC65).

First, there was made a kind of differentiation between the countries. Divisions were made as a consequence of the Union’s decisions on eligibility for membership. While it is envisaged that the Balkan countries will accede to membership; Ukraine, Moldova and the countries of the South Caucasus, which have aspirations for membership, are excluded - as are Russia and Belarus.

63 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.137

64 New Independent States

65 Mediterranean Non-Member Countries (of the EU)

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The peaceful revolution which swept Eastern Europe in 1989 is probably the most significant event in global terms of the past 45 years. It is happening on the very doorstep of the European Community. It represents a challenge and an opportunity to which the EC has given an immediate response.

(Commission 1990b: 5)

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In addition to these overall patterns of differentiation between the Eastern and Southern peripheries, divisions have also been created, within each region, as a consequence of the Union’s decisions on eligibility for membership. [...] While it is envisaged that the Balkan countries will accede to membership, Ukraine, Moldova and the countries of the South Caucasus, which have aspirations for membership, are excluded — as are Russia and Belarus.

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Today, success in developing mutually satisfactory relations with neighbours and (potential) candidates is of paramount importance to the enlarged Union. Both the Eastern and Southern peripheries are characterized by economic and political instability and bitter, unresolved conflicts. In consequence, both are identified in the Union’s Security Strategy as potential sources of risk to European security. Both, too, are important in the supply or transit of energy to the EU. While the Security Strategy makes clear the Unions interest in surrounding itself with a ‘ring of well governed countries’ (European Council 2003: 8), the principal discourses employed within the Union have not been of security and interest but of inclusion and neighbourhood. Rhetorically, at least, the central aim of the Union is to extend to the East and the South its values and practices, and hence its stability and prosperity. This is to be achieved either through incorporation (the Western Balkans and Turkey) or ‘neighbourhood’ (NIS and MNC).

Undoubtedly, the 2004 (later 2007) enlargement represented a success for EU external policy. Nevertheless it raised a number of challenges - not least that of managing relations with neighbouring countries to the East and South in a manner that will avoid creating destabilizing processes of inclusion and exclusion; there was a need of development of mutually satisfactory relations with neighbours temporarily or permanently excluded from candidacy. The launch of the European Neighbourhood Policy (ENP) was an attempt of providing an overarching framework for EU relations with Southern and Eastern “non-candidate” neighbours.

The concept of neighbourhood means denial for accession at the same time. Via ENP the Union conveys its desire for close and cordial relations with countries around the borders of the enlarged European Union. [As Bretherton and Vogler argue, “the apparent denial of “European” status to countries such as Ukraine is both resented and contested; and may be subject to reversal in the future. Meanwhile, the ENP is designed to accommodate considerable differentiation in relations between the EU and its neighbours.”67

67 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.148]

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Undoubtedly the 2004 enlargement represented a success for EU external policy. Nevertheless it raised a number of challenges — not least that of managing relations with neighbouring countries to the East and South in a manner that will avoid creating destabilizing processes of inclusion and exclusion. This will necessitate development of mutually satisfactory relations with neighbours temporarily or permanently excluded from candidacy. Here, the launch of the European Neighbourhood Policy (ENP) in 2003 is an attempt to provide an overarching framework for EU relations with Southern and Eastern ‘non-candidate’ neighbours.

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While intended to convey a desire for close and cordial relations - ‘to create a ring of friends’ around the borders of the enlarged EU (Commission 2003d: 9) — the concept of neighbourhood is also exclusionary. [...]

[...]

The apparent denial of ‘European’ status to countries such as Ukraine is both resented and contested; and may be subject to reversal in the future.34 Meanwhile the ENP is designed to accommodate considerable differentiation in relations between the EU and its neighbours.

[34 This was explicitly acknowledged in a speech in December 2004 by the External Relations Commissioner (Ferrero-Waldner 2004: 1). See Chapter 2 for further discussion of these matters in the context of the Union’s inclusive and exclusive identities.]

The European Neighbourhood Policy has two main objectives: strengthening stability, security and well-being for EU member states and neighbouring countries, and preventing the emergence of new dividing lines between the enlarged EU and its neighbours.

The European Neighbourhood Policy has two main objectives: strengthening stability, security and well-being for EU member states and neighbouring countries, and preventing the emergence of new dividing lines between the enlarged EU and its neighbours67.

Shared values, strong democratic institutions and a common understanding of the need to institutionalize respect for human rights will open the way for closer and more open dialogue on the Union’s Common Foreign and Security Policy and the development of the European Security and Defence Policy. A shared neighbourhood implies burden-sharing and joint responsibility for addressing the threats to stability created by conflict and insecurity. Bretherton and Vogler suggest that greater EU involvement in crisis management in response to specific regional threats would be a tangible demonstration of the EU’s willingness to assume a greater share of the burden of conflict resolution in the neighbouring countries.

Shared values, strong democratic institutions and a common understanding of the need to institutionalise respect for human rights will open the way for closer and more open dialogue on the Union’s Common Foreign and Security Policy (CFSP) and the development of the European Security and Defence Policy (ESDP). A shared neighbourhood implies burden-sharing and joint responsibility for addressing the threats to stability created by conflict and insecurity.

The EU should take a more active role to facilitate settlement of the disputes over Palestine, the Western Sahara and Transdniestria (in support of the efforts of the OSCE and other mediators). Greater EU involvement in crisis management in response to specific regional threats would be a tangible demonstration of the EU’s willingness to assume a greater share of the burden of conflict resolution in the neighbouring countries.

The key ENP instruments through which the policy will be implemented are the Action Plans. According to the Council, these Action Plans should be political documents, [building on existing agreements and setting out the over-arching strategic policy targets, common objectives, political and economic benchmarks used to evaluate progress in key areas, and a timetable for their achievement which enable progress to be judged regularly.]

[...] and the key policy instrument through which policies will be implemented: Action Plans. According to the Council, these Action Plans should be political documents, building on existing agreements and setting out the over-arching strategic policy targets, common objectives, political and economic benchmarks used to evaluate progress in key areas, and a timetable for their achievement which enable progress to be judged regularly.

[According to the Council, these Action Plans should be political documents,] building on existing agreements and setting out the over-arching strategic policy targets, common objectives, political and economic benchmarks used to evaluate progress in key areas, and a timetable for their achievement which enable progress to be judged regularly.

The Strategy Paper is another ENP instrument which sets out principles and scope for the neighbouring countries.

Country reports, covering progress in implementation of bilateral agreements and related reforms, reflect the political, economic, social and institutional situation in the countries and focus on priority areas of the European Neighbourhood Policy.

According to the Council, these Action Plans should be political documents, building on existing agreements and setting out the over-arching strategic policy targets, common objectives, political and economic benchmarks used to evaluate progress in key areas, and a timetable for their achievement which enable progress to be judged regularly. [...]

[...]

[...] The Strategy Paper sets out principles and scope, the participation of other neighbouring countries, Action Plans, regional cooperation, and supporting the ENP. Country reports, covering progress in implementation of bilateral agreements and related reforms, reflect the political, economic, social and institutional situation in the countries and focus on priority areas of the European Neighbourhood Policy.

These range from commitment to democracy and the rule of law, through rights of minorities, trade union rights and gender equality, to combating terrorism and the proliferation of WMD. Other priorities include economic and social development, trade and border management. Specific regional initiatives are proposed in the areas of energy supply (several countries are important sources of, or transit routes for, oil and gas), transport and environment.

These range from commitment to democracy and the rule of law, through rights of minorities, trade union rights and gender equality, to combating terrorism and the proliferation of WMD (Commission 2004a: 13).36 Other priorities include economic and social development, trade and border management. [Promotion of regional cooperation, as in the case of the Western Balkans, will also be a priority, and] specific regional initiatives are proposed in the areas of energy supply (several countries in both peripheries are important sources of, or transit routes for, oil and gas), transport and the environment.

[36 It is noteworthy that the European Security Strategy also prioritizes relations with neighbours — ‘Our task is to promote a ring of well governed countries to the East of the European Union and on the borders of the Mediterranean with whom we can enjoy close and cooperative relations’ (European Council 2003: 8).]

Most significant is the prospect, depending upon progress, of moving beyond cooperation to integration - in relation to the Single Market and other EU policies and programmes. These provisions will be covered by new contractual arrangements, in the form of European Neighbourhood Agreements. Thus, the ENP could lead to a relationship extending to “everything but the institutions”. [At the same time, following the External Relations Commissioner Ferrero-Waldner’s speech in 2004, “still everything is possible”. She [meant that inclusion in the ENP “doesn’t close any doors to European Countries that may at some future point wish to apply for membership”.70

70 Bretherton Carlotte and Vogler John – The European Union as a Global Actor (Second Edition). London, 2006. p.148-149]]

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Most significant is the prospect, depending upon progress, of moving beyond
cooperation to integration – in relation to the Single Market and other EU policies

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and programmes. These provisions will be covered by new contractual arrangements, in the form of European Neighbourhood Agreements. Thus the ENP could lead to a relationship extending to ‘everything but the institutions’.37

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[While there has been little enthusiasm, elsewhere, for Ukrainian membership, the External Relations Commissioner found it necessary to state that membership of the ENP ‘does not close any doors to European countries that may at some future point wish to apply for membership’ (Ferrero-Waldner 2004: 1).]

[37 This concept applies to the members of the European Economic Area — Norway, Iceland and Liechtenstein. In relations with Eastern neighbours, it was originally employed by Commission officials (prior to the development of the ENP) in the context of EU—Russia relations.]

It seems that the neighbourhood policy adopted the same instruments and techniques based on the evolved pre-accession process for the Central and Eastern European states, which are judged to have worked in promoting political reform in candidate countries. Respectively, in the first phase of the ENP political priorities are contained in the Action Plans, while for candidate countries they are contained in the Accession Partnerships. In the second phase, the Commission will report on progress accomplished by the neighbour, as far as every year the Commission reports on progress accomplished by the candidates; and then, on the basis of this evaluation, the EU will review the content of the Action Plan and decide on its adaptation and renewal as it is for the candidate countries – the Union updates the priorities contained in the Accession Partnerships almost every year. All these similarities confirm the statement of the Commission that in enriching relations with partner countries, it will draw on the experience gained in supporting the process of political transition in the new member states and in candidate countries.

The main difference between the EU relations with candidate countries and those coming within the framework of the ENP (non-candidates) has to do with incentives, as only the first foresees the prospect of full EU membership, which is widely recognized to have had a powerful positive effect on the processes of democratic transformation and consolidation among the Central and East European countries. The other foresees the eleven incentives71 in the short term, which aim at reinforcing political, economic and cultural cooperation and some political and economic integration in the long term, which is very different from membership.

71 See Appendix 4 p. 182

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As concerns structures, it seems that the neighbourhood policy will adopt the same instruments and techniques based on the evolved pre-accession process for the central and eastern European states, which are judged to have worked in promoting political reform in candidate countries. In the framework of the ENP, in a first phase, political priorities will be contained in Action Plans, while for candidate countries they are contained in Accession Partnerships, both Action Plans and Accession Partnerships respecting the principles of joint ownership and differentiation. In a second phase the Commission will report on progress accomplished by the neighbour, as far as every year the Commission reports on progress accomplished by candidates; and then, on the basis of this evaluation, the EU will review the content of the Action Plan and decide on its adaptation and renewal; for candidates countries the Union updates the priorities contained in the Accession Partnerships almost every year. All these similarities confirm the

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statement of the Commission, that in enriching relations with partner countries, it will draw on the experience gained in supporting the process of political transition in the new member states and in candidate countries.

The main difference between the strategy of democracy promotion in the framework of enlargement and the strategy of democratization in the framework of the ENP has to do with incentives, as only the first foresees the prospect of full EU membership, which is widely recognized to have had a powerful positive effect on the processes and outcomes of democratic transformation and consolidation among the CEEs. Indeed, the other foresees, as we have seen, eleven incentives, in the short term, which aim at reinforcing political, security, economic and cultural cooperation and some political and economic integration in the long term, which is very different from membership.

One more problem which arises concerning the ENP is that it is not clear if the incentives offered by the framework will prove adequate to achieve the Union’s aim of ensuring the economic and political stability of the Eastern neighbours. Moreover, the Union is involving itself in a highly volatile region (Eastern Europe and the Caucasus), which is regarded by the Russian government as the zone of its special responsibility. The need to exercise caution in the face of Russian sensitivities may prove a major impediment to EU as a global actor. Besides, Russia’s military presence in Moldova and Armenia as well as close interests in the separatist Georgian regions of Abkhazia and South Ossetia generates tensions in the EU-Russian relations.

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These include Russia’s military presence in Moldova and Armenia, and close interest in the separatist Georgian province of South Ossetia, all of which are impediments to the ENP process.47

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It is thus not clear that the incentives offered by the ENP will prove adequate to achieve the Union’s aim of ensuring the economic and political stability of the Eastern neighbours. Moreover, the Union is involving itself in a highly volatile region, which is regarded by the Russian government as its special responsibility. The need to exercise caution in the face of Russian sensitivities may prove a major impediment to EU actorness.

[47 The situation in Moldova is of particular concern to the EU as a consequence of its
border with Romania and hence, in the future, with the Union.]

In many ways the EU from its original conception in the form of the European Coal and Steel Community was always in the business of providing security. This role derived from its presence. However, significant developments from the late 1990s through to the first deployment of forces under the European Security and Defence Policy (ESDP) in 2003 can be regarded as a transformation in which the Union acquired not only an unprecedented military capability but a security strategy to inform its use.

In many ways the EU, from its original conception in the form of the European Coal and Steel Community, was always in the business of providing security. This role derived from its presence. However, significant developments from the late 1990s through to the first deployment of forces under the European Security and Defence Policy (ESDP) in 2003 can be regarded as a transformation in which the Union acquired not only an unprecedented military capability but a security strategy to inform its use.

Over the last ten years, European views on the South Caucasus have repeatedly shifted. After the signature of the 1994 so-called “Contract of the Century” on the exploitation of Azeri oil reserves by western companies, the western states started to view the South Caucasus in more positive terms as a bridge linking different important areas. However, the 11th September terrorist attack and the failure of domestic and regional reforms by the South Caucasus states, had contributed to the region’s negative perception, primarily in security terms.91

91 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.169

Over the last ten years, European views on the South Caucasus have repeatedly shifted. [...] After the signature of the 1994 so-called ‘Contract of the Century’ on the exploitation of Azeri oil reserves by Western companies, Western states came to view the region in more positive terms as a bridge linking different regions. However, after 11 September and the failure of domestic and regional reforms in the South Caucasus, the region is increasingly perceived in negative terms, primarily as a security threat.

Further more, the states have experienced processes of de-industrialization, large-scale emigration (mainly to Russia) and mass poverty. Georgia and Azerbaijan face severe separatist threats from Abkhazia, South Ossetia and respectively Nagorno-Karabakh inside their borders. These internal weaknesses made these states vulnerable to external insecurity developments. As I have already argued, the region has become a transit zone, as well as, a source of transnational organized crime.

All have experienced processes of de-industrialisation, large-scale emigration (mainly to Russia) and mass poverty. None has developed viable or long-term development projects. Georgia and Azerbaijan face severe separatist threats from Abkhazia, South Ossetia and Nagorno-Karabakh inside their borders.

These internal weaknesses make these states vulnerable to external insecurity developments. The region has become a transit zone, as well as a source, of transnational organised crime.

Thus, it is not the Union’s objective to extend its exclusive influence in Georgia, Azerbaijan and Armenia, but to promote the role of international law in these three states founded on the principles of the UN Charter and state sovereignty. Dov Lynch underlines that “the EU will not act alone, but will seek to support and facilitate the activities of key states and international organizations already active in the region.”93

93 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. pp.193-194

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Nor is the Union’s objective to extend its exclusive influence in the three states. The EU maintains an expanding-sum vision of the future of Armenia, Azerbai-

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jan and Georgia and rejects zero-sum approaches. The EU will promote the role of international law in the region, founded on the principles of the UN Charter and state sovereignty. The EU will not act alone, but will seek to support and facilitate the activities of key states and international organisations already active in the region.

In the past years, the picture of EU-South Caucasus relations looked like the following: economic interaction of the South Caucasus with the EU was peripheral as it is today, and as a consumer market the South Caucasus was negligible. There were some EU interests towards the energetic resources of the Caspian Sea, which could decrease the latter’s dependency on the Persian Gulf and Russia, but they were not considered vital enough. The South Caucasus was also peripheral in terms of the EU security interests. The frozen conflicts did not constitute significant threats to European security as did the conflicts of the Balkans.

For present, the situation has changed. The Caspian energy resources have attracted important capital investment by European oil and gas companies, and are relevant to Europe’s energy security. The Armenian-Azerbaijani dispute over Nagorno-Karabakh and the Georgian-“Russian” dispute on Abkhazia and South Ossetia have a destabilizing potential for Europe’s southern core, which makes the settlement of these conflicts a clear EU interest, especially, as they effect relations of the EU and important partners such as Russia.

Another incentive, which makes the South Caucasian countries attractive for the European Community is their function as a bridge to other regions. In the second half of the 1990s, the location of the South Caucasus states on the old Silk Road raised the prospect that these countries would emerge from the political isolation in which they had found themselves during the first years of independence. It also responded to the hope that their geopolitical location would lead to economic development, integration into global markets and political stability. The EU gave strong financial support for the development of a diversified transport system between Europe and Asia, crossing the South Caucasus. But, the failure of these states to remove regional barriers to trade (such as sanctions policies regarding unresolved secessionist conflicts), the lack of cross-border cooperation policies and the corruption of custom officials were a strong disincentive for the Union.98

98 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.168

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With regard to the South Caucasus, economic trade with the EU is peripheral, and as a consumer market, the South Caucasus is negligible. The energy resources of the Caspian Sea may decrease EU dependency on the Persian Gulf and Russia, but they should not be considered vital. The South Caucasus is also peripheral in terms of EU security interests. The frozen conflicts do not constitute significant threats to European security as do the simmering conflicts of the Balkans.

This does not mean that the South Caucasus is entirely irrelevant to EU economic or security interests. Caspian energy resources have attracted important capital investment by European oil and gas companies, and are relevant to Europe’s energy security. The Armenian-Azerbaijani dispute over Nagorno-Karabakh and the Georgian-Russian dispute on Abkhazia and South Ossetia have a destabilising potential for Europe’s southern core that makes the settlement of these conflicts a clear EU interest, especially as they affect relations between the EU and important partners such as Russia and Turkey.

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Another approach to the notion of ‘periphery’ refers to the function of the South Caucasian states as a bridge to other regions. In the second half of the 1990s, the Silk Route discourse – linked among others to a number of transportation and communication projects of the European Commission – was able to fulfil a number of expectations.18 The political discourse locating the Caucasus at the periphery of Europe and Asia raised the prospect that these countries would emerge from the political isolation in which they had found themselves during the first years of independence. It also responded to the hope that their geopolitical location would lead to economic development, integration into global markets and political stability. The EU gave strong financial support for the development of a diversified transport system between Europe and Asia, crossing the South Caucasus. The focus on the South Caucasus as a bridge has receded in EU discourse after the failure of these states to remove regional barriers to trade (such as sanctions policies regarding unresolved secessionist conflicts), the lack of cross-border cooperation policies and the corruption of customs officials.

Since 1999, EU funds have mainly gone to support PCA implementation. The TACIS National Indicative Programs (NIP) 2004-2005 prioritized support for institutional, legal and administrative reform and addressing the social consequences of transition and economic development. Between 1992 and 2004 TACIS national allocations were €111 million in Georgia, €123 million in Azerbaijan and €99 million in Armenia. Funds from the European Agriculture Guarantee and Guidance Fund (EAGGF) in 1992-2004 totalled €62 million in Georgia, €65 million in Azerbaijan and €50 million in Armenia.101

101 International Crisis Group – Conflict Resolution in the South Caucasus: The EU’s Role. Europe Report No.173, 20 March 2006. p.5

Since 1999 EU funds have mainly gone to support PCA implementation. The TACIS National Indicative Programs (NIP) 2004-2005 prioritised support for institutional, legal and administrative reform and addressing the social consequences of transition and economic development.51 Between 1992 and 2004 TACIS national allocations were €111 million in Georgia,52 €123 million in Azerbaijan53 and €99 million in Armenia.54 Funds from the European Agriculture Guarantee and Guidance Fund (EAGGF) in 1992-2004 totalled €62 million in Georgia,55 €65 million in Azerbaijan56 and €50 million in Armenia.57

51 European Commission, “TACIS National Indicative Program for Armenia 2004-2006”, adopted 18 September 2003.

52 Commission Staff Working Paper, op. cit., p. 8.

53 Information provided by the Europa House Information Point, Baku, February 2006.

54 “European Union-Armenia Cooperation Report 2004”, o. cit.

55 Commission Staff Working Paper, op. cit., p.8.

56 Information provided by the Europa House Information Point, Baku, February 2006.

Besides, the European Commission within the framework of the TACIS program supported the creation of a filter system against drug trade from Afghanistan along the old Silk Road.

A Communication on EU relations with the South Caucasus under the PCA of June 1999 identified the conflicts as the root causes of the region’s political, economic and humanitarian problems. In the Commission’s view, EU assistance could only be effective if two conditions were fulfilled: firstly, if the conflicts were settled; and secondly, if regional cooperation became possible. The EC also recognized that the “effectiveness of EC assistance is directly connected to the development of the peace processes”. However, the member states declared that the PCAs offered the best framework for the transformation of the three states. There would be no strategy, and no political role other than that offered by the PCA framework. As Dov Lynch puts it out – “The GAC (General Affairs Council) recognized that EU assistance would be ineffective without conflict settlement, but refused to create a framework that would actually enhance the prospects for the settlement – the PCAs patently not being enough for these purpose. (…) The EU had entered something of a vicious circle, where the correct analysis was being made but there was no political will to act on its conclusions.”102

102 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.182

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The European Commission, in the framework of its TACIS regional programme, supports the creation of a ‘filter system’ against drug trade from Afghanistan along the Silk Route.

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A Communication on EU relations with the South Caucasus under the PCA of June 1999 identified the conflicts as the root causes of the region’s political, economic and humanitarian problems.23 In the Commission’s view, EU assistance could only be effective if two conditions were fulfilled: if the conflicts were settled and if regional cooperation became possible. [...]

[...] The GAC also recognised that the ‘effectiveness of EC assistance is directly connected to the development of the peace processes’. However, the member states declared that the PCAs offered the best framework for the transformation of the three states. There

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would be no strategy, and no political role other than that offered by the PCA framework. [...] The GAC recognised that EU assistance would be ineffective without conflict settlement, but refused to create a framework that would actually enhance the prospects for their settlement – the PCAs patently not being enough for this purpose. At the same time, the Council called for an emphasis on greater regional cooperation, an objective that was blocked by the non-settlement of the conflicts. The EU had entered something of a vicious circle, where the correct analysis was being made but there was no political will to act on its conclusions.

1. reinforced political dialogue with the three states through the PCA mechanisms, including also EU declarations and statements on developments in and around the region’s conflicts;

2. support to the OSCE in South Ossetia, through EU funding of small-scale rehabilitation programmes on the ground, and the presence of the Commission as an observer in the Joint Control Commission (since April 2001) that runs the Russian-led peacekeeping operation in the conflict zone;

3. some EU support to the rehabilitation of Azeri regions freed from Armenian occupation and a declared readiness to support large-scale rehabilitation in the case of a settlement between the two parties;

4. support to the Georgian border guards through three Joint Actions, as well as assistance to the OSCE in monitoring sections of the Georgian-Russian border;

5. support to the rehabilitation of the Inguri power complex, jointly controlled by Abkhazia and Georgia.

Although these activities are not negligible, EU preferred to stay in a political shadow by not involving itself in peace negotiation processes directly.

In early 2001, the Policy Planning and Early Warning Unit in the Council Secretariat contributed a paper that called for a major review of EU policy to the South Caucasus region. In the first half of 2001, the Swedish presidency set the South Caucasus as one of its priorities. Under this impetus, the Council’s Policy Planning and Early Warning Unit published its paper on 4 January 2001 and the first ministerial troika visit was made to the capitals of the South Caucasian states in late February 2001. In “Financial Times” on 20 February, was published an article affirming that “the EU cannot afford to neglect the Southern Caucasus”, and pledging a more targeted EU political role to support conflict resolution. The Conclusions of the GAC of 26 February 2001 launched the first phase of a process which ended in July 2003 with the appointment of a Finnish Diplomat as the EU Special Representative to the South Caucasus.

The GAC declared indeed that “the EU is willing to play a more active role in the region … and look for ways in which it can support efforts to push and resolve conflicts and contribute to post-conflict rehabilitation.” However, the idea of raising the level of dialogue with important regional actors, such as Turkey, Iran, Russia and the United States, was never fulfilled.104

103 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.182

104 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. pp.183-184

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After 1999, EU activities in the region included:

1. reinforced political dialogue with the three states through the PCA mechanisms, including also EU declarations and statements on developments in and around the region’s conflicts;

2. support to the OSCE in South Ossetia, through EU funding of small-scale rehabilitation programmes on the ground, and the presence of the Commission as an observer in the Joint Control Commission (since April 2001) that runs the Russian-led peacekeeping operation in the conflict zone;

3. some EU support to the rehabilitation of Azeri regions freed from Armenian occupation and a declared readiness to support large-scale rehabilitation in the case of a settlement
between the two parties;

4. support to the Georgian border guards through three Joint Actions, as well as assistance to the OSCE in monitoring sections of the Georgian-Russian border;

5. support to the rehabilitation of the Inguri power complex, jointly controlled by Abkhazia and Georgia.

These activities are not negligible. In all, however, the EU retained a low profile, with little presence as such in the negotiating mechanisms, no direct involvement in mediation, and an undefined overall strategy to lead policy.

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Of more direct relevance, the Policy Planning and Early Warning Unit in the Council Secretariat contributed a paper in early 2001 that called for a major review of EU policy to the region.

Crystallising these trends, in the first half of 2001 the Swedish presidency set the South Caucasus as one of its priorities. Under this impetus, the Council’s Policy Planning and Early Warning Unit published its paper on 4 January 2001. The first ministerial troika visit to the capitals of the region in late February 2001 reflected Sweden’s determination to allocate more time and energy to the question. Chris Patten and the late Anna Lindh published a joint article in the Financial Times on 20 February affirming that ‘the EU cannot afford to neglect the Southern Caucasus’, and pledging a more targeted EU political role to

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support conflict resolution.26 The Conclusions of the GAC of 26 February 2001 launched the process whose first phase ended in July 2003 with the appointment of Heikki Talvitie as EU Special Representative.27 The GAC declared indeed that ‘the EU is willing to play a more active role in the region . . . and look for ways in which it can support efforts to push and resolve conflicts as well as in post-conflict rehabilitation.’

[...] However, the idea of raising the level of dialogue with important regional actors, such as Turkey, Iran, Russia and the United States, was never fulfilled.

As Crisis Group indicates, impressed by the reformist rhetoric of President Saakashvili’s new administration, the EU expressed firm political support for stability and reform in the country. In June 2004, the Commission pledged nearly 1 billion USD. On 2 July 2004, the Commission made available €4.65 million under its Rapid Reaction Mechanism for measures to reinforce the rule of law and democratic processes; and at the request of Georgian authorities the Council launched the ESDP rule of law mission to help address urgent challenges in the criminal justice system. The new EU projects were partly conflict prevention measures – efforts to solidify the revolution’s foundations and combat risks of destabilization. They also complemented existing TACIS programs supporting institutional, legal and administrative reforms.106

106 International Crisis Group – Conflict Resolution in the South Caucasus: The EU’s Role. Europe Report No.173, 20 March 2006. p.5-6

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Impressed by the reformist rhetoric of President Saakashvili’s new administration, the EU agreed to early support.59 The Council made three statements within three months in 2003-2004 expressing firm political support for stability and reform in Georgia.60 The Commission took the lead in organising a June 2004 donors conference during which pledges of nearly $1 billion61 were made.62 On 2 July 2004 the Commission made available €4.65 million under its Rapid Reaction Mechanism (RRM) for measures to

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reinforce the rule of law and democratic processes,63 and at the request of Georgian authorities the Council launched the ESDP rule of law mission to help address urgent challenges in the criminal justice system.64 The new EU projects were partly conflict prevention measures – efforts to solidify the revolution’s foundations and combat risks of destabilisation. They also complemented existing TACIS programs supporting institutional, legal and administrative reforms.65

59 General Affairs and External Relations Council (GAERC), Council Conclusions, 26 January 2004, at: http://europa.eu.int/ comm/external_relations/georgia/intro/gac.htm#geo260104.

60 General Affairs and External Relations Council (GAERC), Council Conclusions, 17 November 2003, 9 December 2003 and 26 January 2004, at: http://europa.eu.int/comm/external_ relations/georgia/intro/gac.htm#geo260104.

61 Figures denoted in dollars ($) in this report refer to U.S. dollars.

63http://europa.eu.int/comm/external_relations/georgia/intro/ip 04_846.htm. Funds were allocated to projects in four areas: penitentiary and probation service reform, organisational reform of the ministry of justice and other public institutions, parliamentary and electoral reform, and confidence building among population groups affected by conflict.

64 Joint Action 2004/523/CFSP, “on the European Union Rule of Law Mission in Georgia, EUJUST THEMIS”, 28 June 2004. EUJUST Themis terminated on 15 July 2005, after which and until March 2006, when the lead went to the Commission, the EUSR had a responsibility to follow up implementation of the reform strategy (Joint Action 2005/582/CFSP of 28 July 2005).

65 The EU supported has democratisation and human rights in Georgia since the early 1990s. This has not been so in Armenia and Azerbaijan. NGOs from all three countries can, nevertheless, apply for European Initiative for Democracy and Human Rights (EIDHR) funds.

Somewhat surprisingly, the Commission changed its mind very quickly and recommended Armenia, Azerbaijan and Georgia to enter the newly drafted ENP in June 2004. More to that point, in September 2004, the President (by that time) of the European Commission Romano Prodi paid a ground-breaking visit to the South Caucasus.

It was not until after the European Security Strategy had been adopted in December 200311 that the Commission changed its mind and recommended that Armenia, Azerbaijan and Georgia take part.12 They were offered inclusion in the ENP in June 2004, and in September 2004 the then-President of the European Commission, Romano Prodi, paid a ground-breaking visit.

Pamela Jawad declares: “As far as individual Member States are concerned, all in all, the South Caucasus countries have lacked a lobbyist among them (…) in order to catalyze a greater interest from Brussels.”107

Different member states have different priorities. They do not have a coherent position regarding the South Caucasus. In the beginning, France and the UK have taken a critical position towards an enhanced role of the EU in the region. It was rather because of the fact that they, both, have taken an active role in their national policies. However, the UK lobbied for Georgia to be included in the ENP and even keenly advocated its EU accession after the Rose Revolution. This changing position of the UK has certainly much to do with the fact that British Petroleum (BP) had a leading position in the construction of the BTC and the BTE pipelines.108

Some Member States have called for a stronger role of the EU in the South Caucasus. Among them are Germany and several Nordic states. [...] It has launched a “Caucasus Initiative” in its development cooperation in April 2001, aimed at a better understanding between the three countries by promoting measures with a cross-border impact in five sectors: reforming the judiciary and developing civil society (municipal democracy), facilitating access to credit in the private sector, securing supplies in the energy sector, combating tuberculosis in the health sector, and preserving biodiversity.

As far as individual Member States are concerned, all in all, the South Caucasus countries have lacked a lobbyist among them during the 1990s in order to catalyze a greater interest from Brussels, other than e.g. the Baltic States in the shape of the Scandinavian countries, or Spain and Italy in favor of the Mediterranean states.66

[...] Particularly France and the UK have taken a critical position towards an enhanced role of the EU in the region, despite or rather because of the fact that they both have taken an active role in their national policies. Notwithstanding, the UK lobbied for Georgia to be included in the ENP and even keenly advocated EU accession after the ‘Rose Revolution’.67 Taking obvious interest in a leading position concerning energy development in the shape of the construction of the BTC and the Baku-Tbilisi-Erzurum (BTE) pipelines, especially with the British Petroleum (BP) company, she has appointed her former ambassador in Moscow, Brian Fall, as UK Special Representative for Georgia in October 2002, later on for the whole South Caucasus region. [...]

Nevertheless, some Member States have called for a stronger role of the EU – especially Germany and several Nordic states. Germany, who will hold the Council Presidency in the first half of 200769, has launched a “Caucasus Initiative” in her development cooperation in April 2001, aimed at a better understanding between the three countries by promoting measures with a cross-border impact in five sectors: reforming the judiciary and developing civil society (municipal democracy), facilitating access to credit in the private sector, securing supplies in the energy sector, combating tuberculosis in the health sector, and preserving biodiversity.70

69 In this regard, an outlook on the actual working program emphasizes the relevance of energy policy for the shaping of foreign and security policy and the stabilization of the immediate geographical neighborhood as well as the promotion of freedom, democracy and free-market economies in other parts of the world; cf. Speech by State Secretary Silberberg “A Preview of Germany’s EU Presidency: The Status of the Federal Government’s Preparations” on 4 October 2006, in: www.auswaertiges-amt.de/diplo/de/Infoservice/Presse/ Reden/2006/061004-SilberbergEuropa.html (accessed in 10/2006).

With regard to Georgia, Sweden was one of the main advocates of the latter’s incorporation into the ENP and has undertaken to double her development assistance, while emphasizing that development cooperation with Armenia and Azerbaijan, whose “will to implement political reform appears to be limited (...), should again be limited in financial scope”.111

With regard to Georgia, Sweden was one of the main advocates of her incorporation into the ENP79 and has undertaken to double her development assistance, while emphasizing that development cooperation with Armenia and Azerbaijan, whose “will to implement political reform appears to be limited [...], should again be limited in financial scope”80.

[Moreover, a greater degree of communication can be expected between] the member states and the EU. The CFSP High Representative and the EU Special Representative can play a bridging role in this respect. The EU will only be able to exploit the tool of conditionality in relations with the three states, if the Union itself is better coordinated and targeted.

Moreover, a greater degree of communication can be expected between member states and the EU. The CFSP High Representative and the Special Representative can play a bridging role in this respect. The EU will only be able to exploit the tool of conditionality with the three states if the Union itself is better coordinated and targeted.

Poland, even before its own accession to the EU, has emphasized the “utmost importance” of the development and democratization of the South Caucasus states and initiated an “Eastern Dimension” strategy that seeks to complement the EU’s ENP.

The Baltic States, which share a common background with Armenia, Azerbaijan, and Georgia as former members of the Soviet Union, believe they have a duty to act as mentors to other states aspiring to join either NATO or the EU. The Lithuania’s Prime Minister Algirdas Brazauskas has made a statement during his stay in Germany (May 2006) that the Baltic States, which are EU members already, have much experience to share with the countries like Ukraine, Moldova and the Southern Caucasus states. Therefore, the South Caucasus countries could benefit from the Baltic experience of transition and EU alignment.116

Estonia and Lithuania have played an important role in the deployment of “Eujust Themis” to Georgia – the EU’s first rule of law mission in the former Soviet Union under the European Security and Defense Policy.

The latter not only concerns Poland, who, even before her own accession to the EU, has emphasized the “utmost importance” of the development and democratization of the South Caucasus states and initiated an “Eastern Dimension” strategy that seeks to complement the EU’s ENP75, but also the Baltic States, which Armenia, Azerbaijan, and Georgia share a common background as former members of the Soviet Union with. The Baltic countries believe they have a duty to act as mentors to other states aspiring to join either NATO or the EU.76 A statement made by Lithuania’s Prime Minister Algirdas

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Brazauskas at his visit to Germany on 10 May 2006, where he met Federal Chancellor Angela Merkel, emphasizes this: “The Baltic States, which are EU members already, have much experience to share with the countries like Ukraine, Moldova and Southern Caucasus countries”77. Therefore, the South Caucasus countries could benefit from the Baltic experience of transition and EU alignment. [...] And Estonia and Lithuania have played an important role in the deployment of “EUJUST THEMIS” to Georgia, the EU’s first rule of law mission within the common European Security and Defense Policy (ESDP) (see below, page 26).

75 In a speech in September 2002, Poland’s Minister of Foreign Affairs stated: “The global cooperation of the European Union and the United States for the development of trade, investment and security, including the safety of energy supplies, should be extended to cover Trans-Caucasian and Central Asian states. The devel-opment and democratization of those regions is of utmost importance for a secure world and protection of common economic interests.” Cimoszewicz, Wlodzimierz, Transatlantic relations today and in the future - A speech by Mr. Wlodzimierz Cimoszewicz the Minister of Foreign Affairs of the Republic of Poland at George-town University, September 10, 2002, in: www.msz.gov.pl/10,wrzes-nia,2002r.,,Wystapienie,Ministra,Spraw, Zagranicznych,w,Georgetown,,Waszyngton,1271.html (accessed in 5/2006), p. 6.

76 Cf. George C. Marshall European Center for Security Studies, Dual Enlargement and the Baltic States: Security Policy Implications, A Report of the George C. Marshall European Center for Security Studies Conference in Tallinn, Estonia, February 11-13, 2004, in: www.marshallcenter.org/site-graphic/lang-en/ page-pubs-conf-1/static/xdocs/conf/2004-conferences/0409/0409-report.pdf (accessed in 5/2006), p. 4.

77 Government of the Republic of Lithuania, Press Release, 10 May 2006, in: www.lrv.lt/main_en.php?id= en_aktualijos_su_video/p.php&n=132 (accessed in 5/2006).

So far, the UN and the OSCE have taken the lead in promoting conflict settlement. Yet, more than a decade of negotiations led by the UN in Abkhazia, and the OSCE in Nagorno-Karabakh and South Ossetia, have failed to produce negotiated settlements. Ceasefires have been signed, but gunfire is still exchanged. There are dozens of fatalities each year, including recent (summer 2008) escalations in Abkhazia and South Ossetia, which grew into the broader Russia-Georgian armed confrontation.

[...] The European Union can offer added value to the efforts of the UN and OSCE. It has at its disposal political and economic instruments to provide incentives and apply conditionality on conflicting parties if it chooses to become more directly involved in ongoing negotiations.

So far the UN and the OSCE have taken the lead in promoting conflict settlement, yet more than a decade of negotiations led by the UN in Abkhazia, and the OSCE in Nagorno-Karabakh and South Ossetia, have failed to produce negotiated settlements.14 Ceasefires have been signed but gunfire is still exchanged, especially on the Nagorno-Karabakh ceasefire line, where there are dozens of fatalities each year. The EU, generally more comfortable with a post-conflict rehabilitation and peace building role, has been wary of becoming directly involved in conflict resolution. Yet, it can offer added value to the efforts of the UN and OSCE. It has at its disposal political and economic instruments to provide incentives and apply conditionality on conflicting parties if it chooses to become more directly involved in ongoing negotiations.

14 The Agreement on Ceasefire and Separation of Forces was signed by Georgian and Abkhaz officials in Moscow in May 1994; the Sochi Agreement was signed by Presidents Shevardnadze and Yeltsin in June 1992, establishing a ceasefire in South Ossetia; a ceasefire was signed by Armenia, Azerbaijan and Nagorno-Karabakh parties in May 1994.

The TACIS National Indicative Programs (NIPs) 2004-2006 for the two countries prioritize support for institutional, legal and administrative reform and address the social consequences of transition and economic development. For some reasons, projects in the politically sensitive fields of judiciary and law enforcement reform, civil society development and human rights were not defined as areas of cooperation.

As the conflict over Nagorno-Karabakh is concerned, the NIPs stated the following: the Azerbaijani NIP – “EU accords very high priority to measures which can both a) underpin a peace settlement b) and prepare Azerbaijan to derive maximum benefit from the ending of the conflict”.

The Armenian NIP – “the EU/EC shall…continue to follow closely…developments on the peace process… including with a view to support efforts to resolve the conflict as well as in post-conflict rehabilitation. Support to key infrastructure sectors, especially in the energy and transport sectors…. De-mining actions will also form an element of reconstruction programs in order to ensure restoration of normal living and working conditions”.

The TACIS National Indicative Programs (NIPs) for the two countries, 2004-2006, prioritise support for institutional, legal and administrative reform and addressing the social consequences of transition and economic development.66 For some reason, projects in the politically sensitive fields of judiciary and law enforcement reform, civil society development and human rights were not defined as areas of cooperation.67 The Nagorno-Karabakh conflict was at least mentioned: the Azerbaijani NIP stated that the “EU accords very high priority to measures which can both a) underpin a peace settlement b) and prepare Azerbaijan to derive maximum benefit from the ending of the conflict”.68 The Armenian NIP provided that “the EU/EC shall…continue to follow closely…developments on the peace process… including with a view to support efforts to resolve the conflict as well as in post-conflict rehabilitation. Support to key infrastructure sectors, especially in the energy and transport sectors…. De-mining actions will also form an element of reconstruction programs in order to ensure restoration of normal living and working conditions”.69

67 As they are in Georgia. European Commission, Country Strategy Paper 2003-2006 and TACIS National Indicative Programme 2004-2006, Georgia, adopted 23 September 2003, pp.26-32. Recently the Commission started a judicial reform project in Azerbaijan for €2.8 million to assist the penitentiary system, bailiffs and the usher service. It also plans to start an “integrated border management and combat trafficking in persons” project worth €2 million. Local NGOs in Azerbaijan complain about EU lack of interest in their work. Crisis Group interview, director of the Democracy, Human Rights and Media Monitor, Baku, January 2006. Crisis Group interview, chairwoman of the Bureau for Human Rights and Legal Defence, Baku, January, 2006.

The International Crisis Group argues that Azerbaijan sees European integration as part of its broader regional agenda based on oil and gas resource extraction and distribution. A growing self-confidence based on high expectations of oil wealth encourages some elites to wonder – “if we have oil, do we still need Europe?” But, on the other hand, there are still some people within governmental as well as non governmental structures who believe that their country may be losing a historic opportunity to move closer to Europe along with its South Caucasus neighbours and risks drifting towards a Central Asian type relationship with Brussels instead.

Azerbaijan sees European integration as part of its broader regional agenda based on oil and gas resource extraction and distribution. This is likely to become more evident as Turkey approaches EU membership.76 A growing self-confidence based on high expectations of oil wealth encourages some elites to wonder, “if we have oil, do we still need Europe?”77 Yet some working within government and non-governmental structures expressed concern to Crisis Group that their country may be losing an historic opportunity to move closer to Europe along with its South Caucasus neighbours and risks drifting towards a Central Asian-type relationship with Brussels instead.78

76 Rza Ibadov, Azerbaijan and the European Union Neighbourhood Policy: Building a Privileged Relationship (London, 2005), p. 27. Several Azerbaijani researchers argued Azerbaijan would be easier to integrate into Europe because it had a more Europeanised political culture and smaller population than Turkey. Crisis Group interviews, Baku, January 2006.

77 Crisis Group interviews, local and international informants, Baku, February 2006.

78 Crisis Group interviews, Azerbaijan government official and NGOs, Baku, February 2006.

With his new mandate, Mr. Semneby could try to participate directly in the conflict resolution negotiations. This is most likely to happen in the scope of the South Ossetian conflict solving process as Georgia has already invited the EUSR to participate in the procedure. For Tbilisi, the inclusion of the EUSR in the aforementioned process would help in changing existing negotiation formats, which is, following the Georgian perception, outdated after a decade of fruitless talks. The EUSR cou1d join the JCC132 either as an observer or a full participant or even take the lead in creating a new format based on direct talks between Georgia, South Ossetia and perhaps Russia.

132 The Joint Control Commission is a negotiating body to the South Ossetian conflict and consists of the following parties: Georgia, Russia, self proclaimed South Ossetian authorities and OSCE representatives.

With his new mandate, however, he could try to participate directly in conflict resolution negotiations.251 This is most likely in the context of the South Ossetian conflict, as Georgia has already invited the EUSR,252 unlike Armenia and Azerbaijan. For Tbilisi, inclusion of the EUSR would mark significant progress towards changing existing negotiation formats, which it considers biased and outdated after a decade of fruitless talks. The EUSR could join the JCC either as an observer or a full participant or take the lead in creating a new format based on direct talks with Georgia, South Ossetia and perhaps Russia.

251 As a rapidly growing donor, the U.S. might also become interested in being involved in the negotiation format as an observer.

The enlarged EU has new borders with Belarus, Ukraine, Russia (as a consequence of the 2004 enlargement), Moldova and the Black Sea (after the 2007 enlargement). These new borders have brought EU a new obligation of thinking about the states on its periphery and the policies that should be developed in response to potential and actual threats emerging from these regions. One more reason why a new policy should be drafted was the fact that the PCA approach applied to the former Soviet republics was not good enough to promote EU political interests. So, the EU has started to rethink policy towards the states on its new borders. During the 90s and in the first years of the beginning of 21st century, the European Union’s foreign policy was unskilled. In case the membership prospect was not granted to a country, the EU had nearly no other strategy for relations with the latter. In 2003, the Commission’s “Wider Europe” Communication reflects an attempt to develop policies towards states where the EU has significant interests but where membership is not a prospect.

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Second, the enlarged EU will have new borders, immediately with Belarus, Ukraine and Russia, and at some time after 2007 with Moldova and the Black Sea. These new borders also bring a new immediacy to EU thinking about the states on its periphery and the policies that should be adopted in response to potential and actual threats emerging from these regions.

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Third, partly in response to these pressures, the EU has started to rethink policy towards the states on its new borders. For much for the 1990s, EU ‘foreign policy’ – if this is the appropriate term – revolved around the question of membership/non-membership:
if membership was on the cards, then the EU had a fully developed policy towards a given state; if it was not, then the EU had little policy at all. This is changing. The Commission’s ‘Wider Europe’ Communication reflects an attempt to develop policies towards
states where the EU has significant interests but where membership is not a prospect for now.

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Second, the blanket PCA approach applied to the former Soviet republics in the mid-1990s will not be enough to assist the transformation of these states or to promote EU political interests.

Division of the member states over the Iraqi war, mentioned previously, was a bad proof for the CFSP, but on the other hand, the Iraqi crisis stimulated thinking on the development of an EU Security Strategy drafted by Mr. Javier Solana. A major point made in the Security Strategy is the need to have a belt of well-governed countries around the European Union.

On 11 March 2003, the European Commission published its Communication “Wider Europe - Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours”. As I already previously examined, the South Caucasus states were a footnote in the Communication: “Given their location, the Southern Caucasus therefore also falls outside the geographic scope of this initiative for the time being.” But later, in June 2004, the three South Caucasian states, Armenia, Georgia and Azerbaijan, were rescued from obscurity in the draft EU Security Strategy approved at the Thessaloniki summit. The draft Strategy, entitled as “A Secure Europe in a Better World”, outlined the Union’s strategic circumstances, the variegated nature of threats facing the Union and the policies that must be considered in response. In the section on “Extending the Zone of Security around Europe”, the EU Strategy states: “We should take a stronger interest in the problems of the Southern Caucasus, which in due course will also be a neighbouring region.”138

138 Baev, Cornell – The South Caucasus. ISS, Dec. 2003. p.171

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On 11 March 2003, the European Commission published its Communication ‘Wider Europe – Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours’, which launched a debate about EU policy towards its new neighbours.2 The South Caucasus was a footnote in the Communication: ‘Given their location, the Southern Caucasus therefore also falls outside the geographic scope of this initiative for the time being.’ Then, in June 2003, the three South Caucasian states, Armenia, Georgia and Azerbaijan, were rescued from obscurity in the draft EU Security Strategy, written by Javier Solana and approved at the Thessaloniki summit.3 The draft Strategy, entitled ‘A Secure Europe in a Better World’, outlined the Union’s strategic circumstances, the variegated nature of threats facing the Union and the policies that must be considered in response. In the section on ‘Extending the Zone of Security around Europe’, the EU Strategy states: ‘We should take a stronger interest in the problems of the Southern Caucasus, which in due course will also be a neighbouring region.’

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More widely, the Iraqi crisis stimulated thinking on the development of an EU Security Strategy, drafted by Javier Solana. A major point made in the Security Strategy is the need to have a belt of well-governed countries on the EU’s borders.

The European Union offers the prospect of a stake in the EU’s internal market to those countries that make concrete progress demonstrating shared values and effective implementation of political, economic and institutional reforms. [In order to have a better overview of the ENP offered incentives please see the appendix 4.139]

As listed in the appendix 4, neighbouring countries are invited to take political and legislative measures to enhance economic integration and liberalization, and measures to promote human rights, cultural cooperation and mutual understanding. Besides, they are explicitly invited also to make steps towards regional security co-management and participate in initiatives aimed at improving conflict prevention and crisis management as well as strengthening co-operation to prevent and combat common security threats.

[139 Appendix 4 p.182]

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The European Union offers the prospect of a stake in the EU’s internal market to those countries that make concrete progress demonstrating shared values and effective implementation of political, economic and institutional reforms.

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Neighbouring countries are invited to take political and legislative measures to enhance economic integration and liberalization, and measures to promote human rights, cultural cooperation and mutual understanding. Besides these measures, which are coherent with the European view of regional security, neighbouring countries are explicitly invited also to make steps towards regional security co-management and participate in initiatives aimed at (a) improving conflict prevention and crisis management, and (b) strengthening co-operation to prevent and combat common security threats.

It can be argued that there are similarities as well as differences between the strategy of democracy promotion through enlargement and a strategy of democratization in the framework of the ENP. Both require commitment to EU values from candidate/ENP member countries. But, the most important difference has to do with incentives. As abovementioned, for political and economic reforms, the ENP offers in return increased political, security, economic and cultural cooperation.

As regards similarities and differences between the strategy of democracy promotion through enlargement and which could be a strategy of democratization in the framework of the ENP, we can say that the firsts can be found in content, conditionality and processes, while the main difference has to do with incentives.

[...]

As regards conditionality, the Commission has made explicit the conditionality attached to shared values, and the resulting priorities to be identified in the Action Plans94: increased political, security, economic and cultural cooperation is offered in return for political and economic reform.

In 2005-2006, Armenia, Azerbaijan, and Georgia entered dialogues with the EU to prepare country-specific cross-pillar Action Plans, which were aimed at building mutual commitment to common values and provide a point of reference for future programming under the new European Neighbourhood and Partnership Instrument (ENPI)148.

148 A specific and innovative feature of the ENPI is its cross border cooperation component. Under this component, the ENPI will finance “joint programs” bringing together regions of Members States and partner countries sharing a common border. The financial reference amount for implementation of the Regulation over the period 2007-2013 is € 14.929 million for 17 partner states – members of the ENP, including the Caucasus. ENPI names both state and non-state actors, such as NGOs, local communities, municipalities, trade unions, universities, religious associations and other, who can contribute to the development, as eligible for the assistance. The mechanism and distribution of assistance as well as correlation of financial support among the state and non - state actors will have a significant impact on the success of reforms in all three South Caucasus states. See Alieva Leila – EU and South Caucasus. Bertelsmann Group for Policy Research. CAP Discussion Paper, December 2006.p.8

In 2005-2006 Armenia, Azerbaijan, and Georgia entered dialogues with the EU to prepare country-specific, cross-pillar Action Plans,87 which are aimed at building mutual commitment to common values and provide a point of reference for future programming, especially under the new European Neighbourhood and Partnership Instrument (ENPI).88

87 By end 2005, ENP Action Plans had been formally adopted with Israel, Jordan, Moldova, Morocco, the Palestinian Authority, Tunisia and Ukraine. Negotiations were ongoing with Egypt and Lebanon as well as Armenia, Azerbaijan and Georgia. The seven existing Action Plans mostly focus on political dialogue and reform; economic and social development; regulatory and trade-related issues; justice and home affairs; sectoral issues; and people-to-people contacts. The Maastricht Treaty 1992 established three pillars, forming the basic structure of the EU: the Community dimension, covering economic, social and environmental policies (first pillar); the common foreign and security policy (second pillar); and police and judicial cooperation in criminal matters (third pillar). The Treaty of Amsterdam transferred policies related to the free movement of persons from the third to the first pillar.

88 European Commission, “Proposal for a Regulation of the European Parliament and of the Council laying down general provisions establishing a European Neighbourhood and Partnership Instrument”, COM (2004), 628 final, Brussels, 29 September 2004. The ENPI regulation and its implementing rules have yet to be adopted. ENPI is supposed to be operational by 2007.

The EU has pledged that successful fulfilment of the Action Plan can lead to further deve1opment of bilateral relations, including new contractual links in the form of European Neighbourhood Agreements.

Following the Crisis Group evaluation – the Action Plans risk becoming sole technical documents, which do little to strengthen genuine political ties. Besides, the potential of Action Plans to promote conflict resolution has not been fully exploited. According to the original strategy, the ENP was to “reinforce stability and security and contribute to efforts at conflict resolution” and to strengthen “the EU’s contribution to promote the settlement of regional conflicts”. However, by reviewing the South Caucasus plans, there is nothing to find concerning concrete steps for conflict resolution, but the latter is included as one of many priorities under “political dialogue and reform”. The focus is made on trade relations and economic and political change. An exception is the AP of Moldova in which a viable solution to the Transdniestria conflict is defined as a key priority and seven steps are elaborated.149

In its 2005 recommendations for Armenia, Azerbaijan and Georgia, the Commission restricted its commitment to conflict resolution, stating that the Action Plans should offer “further support for economic rehabilitation of the conflict zones in the context of conflict settlement”. [...] As a consequence, Georgian sources expressed frustration that the EU was unwilling to incorporate more conflict resolution commitments in the action plan.

149 International Crisis Group – Conflict Resolution in the South Caucasus: The EU’s Role. Europe Report No.173, 20 March 2006. p.8

The EU has pledged that successful fulfilment of the Action Plan can lead to further development of bilateral relations, including new contractual links in the form of European Neighbourhood Agreements.89

[...] In reality, the plans risk becoming long-winded technical documents which do little to strengthen genuine political ties. [...]

The potential of Action Plans to promote conflict resolution has not been fully exploited. According to the original strategy, the ENP was to “reinforce stability and security and contribute to efforts at conflict resolution” and to strengthen “the EU’s contribution to promoting the settlement of regional conflicts”.91 However, a brief review of the existing seven shows that conflict resolution has largely fallen by the wayside, just one of many priorities under “political dialogue and reform”. The focus is on trade relations and economic and political change.92 An exception is the Moldova plan in which a viable solution to the Transdniestria conflict is defined as a key priority and seven steps are elaborated.93

[...] In its 2005 recommendations for Armenia, Azerbaijan and Georgia, the Commission restricted its commitment to conflict resolution, stating Action Plans should offer “further support for economic rehabilitation of the conflict zones in the context of conflict settlement”.95

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Georgian sources expressed frustration that the EU was unwilling to incorporate more conflict resolution commitments in the text.100

89 Content and scope still has to be defined. European Commission, “European Neighbourhood Policy”, op. cit., pp.3-4.

95 European Commission, “European Neighbourhood Policy: Recommendations for Armenia, Azerbaijan, Georgia and for Egypt and Lebanon”, Communication to the Council, COM (2005), 72 final, Brussels, 2 March 2005. This restricted contribution to conflict resolution is at least partially to be explained by the fact that the Commission generally focuses on economic rehabilitation projects while more “hard-power” and political crisis management is the prerogative of the Council.

As already mentioned previously, Tbilisi wants the peaceful resolution of internal conflicts to be the first priority in the Action Plan. Tbilisi considers integration into the Europe to be a key factor for resolving its conflicts and assumes that cooperation with the EU will be based only on respect of the “sovereignty and territorial integrity of Georgia within its internationally recognized borders”. It seeks EU support for implementing the Georgian peace plans for settlement of the conflicts in South Ossetia and Abkhazia and would like the Action Plan to include more instruments from the ESDP toolbox promoting regional stability and crisis management. Georgia appreciates the economic rehabilitation assistance the EU provides in the South Ossetia and Abkhazia, but declares that this kind of help should be supplemented by greater political and military engagement. Thus, Tbilisi seeks direct EU political participation in the settlement of the conflicts, which it considers to be unresolved primarily because of Russian ambiguous meddling; and believes that the EU could exercise a positive influence on Russia to make its role more constructive.

Tbilisi wants the “peaceful resolution of internal conflicts” to be the first priority in its Action Plan.103 Detailed measures to increase “cooperation for the settlement of Georgia’s internal conflicts” are elaborated upon in the draft “Elements for Inclusion”, proposed to Brussels in December 2005, since Tbilisi considers integration into Europe a key factor for resolving its conflicts.104 Georgia is lobbying for a pledge that cooperation with the EU will based on respect of the “sovereignty and territorial integrity of Georgia within its internationally recognised borders”. It seeks EU support for implementing the Georgian “peace plan for settlement of the conflict in South Ossetia”, including assistance in demilitarisation, confidence building, and economic development,105 and would like the Action Plan to include more instruments from the ESDP toolbox to promote regional stability and crisis management. Georgia is appreciative of the economic rehabilitation assistance the EU provides in the South Ossetia and Abkhazia conflict zones106but clearly feels that this kind of help should be supplemented by greater political and military security-related engagement.107

[...] It seeks direct EU political participation in the settlement of the South Ossetian and Abkhaz conflicts, which it considers to be unresolved primarily because of Russian meddling, and believes the EU “can have a positive influence on Russia

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to make its role more constructive”.108

103 “Elements for Inclusion in an EU/Georgia ENP Action Plan”, amended draft 20 December 2005, p.3. In earlier versions, peaceful resolution of the conflicts was not identified as a primary priority, though it was included. Crisis Group interview, former official, Georgian ministry of foreign affairs, Tbilisi, December 2005.

104 Addressing the European Parliament’s Foreign Affairs Committee in Brussels, Foreign Minister Gela Bezhuashvilil explained, “the most serious impediment for the consolidation of democracy and economic development in Georgia has been internal so-called ‘frozen conflicts’ in Abkhazia and South Ossetia. [The] existence of conflicts poses a major threat to the security and development of not only Georgia, but is detrimental to democracy, security, and stability in the South Caucasus region as a whole.” Ahto Lobjakas, “Georgia lobbies for EU backing in standoffs with Russia”, RFE/RL Caucasus Report, 27 January 2006.

105 As proposed in the “Elements for Inclusion in an EU/Georgia ENP Action Plan”, amended draft, 20 December 2005. For more, see Section IV below.

106 See Section III below.

107 Crisis Group interview, official, Office of the State Minister of Georgia on European and Euro-Atlantic Integration, Tbilisi, December 2005.

108 Giorgi Baramidze, Georgian State Minister on European and Euro-Atlantic Integration, talking points for a meeting with Benita Ferrero-Waldner, EU Commissioner for External Relations and European Neighbourhood Policy, May 2005, at http://www.eu-integration.gov.ge/eng/speeches. php.

The EC is mainly interested in supporting current UN and OSCE negotiation efforts and formats and believes its main contribution to conflict resolution should be assisting Georgia create a state based on European values and standards, which ultimately could be more attractive to South Ossetia and Abkhazia than independence or closer integration with Russia.152

152 International Crisis Group – Conflict Resolution in the South Caucasus: The EU’s Role. Europe Report No.173, 20 March 2006. p.11

However, the EU is more interested in supporting current UN and OSCE negotiation efforts126 and considers the promotion of European values as an indirect means to contribute to conflict resolution by helping to create a Georgian state that could be more attractive to South Ossetia and Abkhazia than independence or closer integration with Russia.

126 This was expressed by members of the EC in interviews held in Brussels on 3 May 2006.

To some degree like Georgia, Armenia initially used its June 2005 “Framework proposal for its Action Plan” to ask the EU help addressing some of the consequences of the Nagorno-Karabakh conflict. It called for assistance in maintaining and strengthening the regime of ceasefire in the zone of the conflict and to work towards exclusively peaceful conflict settlement taking into account the right of people of Nagorno-Karabakh to self-determination. Besides, Armenia has requested the EU to refrain from funding any regional projects that increase its isolation and is looking forward to Brussels to encourage Ankara to open the borders with Armenia seeking to normalize relations.

To some degree like Georgia, Armenia initially used its June 2005 “Framework proposal for its Action Plan” to ask that the EU help address some of the consequences of the Nagorno-Karabakh conflict. It called for assistance in “maintaining and strengthening the regime of ceasefire” in the zone of the conflict and “to work towards exclusively peaceful conflict settlement taking into account the right of people of Nagorno-Karabakh to self-determination”.124 [...] Armenia has requested the EU to refrain from funding any regional projects that increase its isolation126 and has generally found a sympathetic ear when promoting the virtues of regional cooperation. It also seeks political support to help resolve its conflicts with Turkey, looking to Brussels to encourage Ankara to open the borders with Armenia,127 normalise relations and play a constructive role on Nagorno-Karabakh.128

124 “Framework Proposal for ENP Armenia Action Plan”, 15 June 2005.

126 During her visit to Armenia on 17 February 2006, Commissioner Ferrero-Waldner called economic integration in the South Caucasus a necessary condition for regional stability. She confirmed EU opposition to plans by Azerbaijan, Georgia and Turkey to build a regional railway bypassing Armenia. “A railway project that is not including Armenia will not get our financial support”. Anna Saghabalian, “EU Signals More Attention to Political Reform in Armenia”, RFE/RL, Armenialiberty, 17 February 2006, http://www.armenialiberty. org/armeniareport/report/en/2006/02/84CE2183-237B-4641-92EE-899C68818D0B.asp.

Only the following specific actions are indicated in the AP in order to contribute to the peaceful resolution of the conflict: increased diplomatic efforts; continued support for a peaceful solution; and increased support for the OSCE Minsk Group negotiation process. [Other sections refer to promoting sustained efforts for peace as well as aid for internally displaced persons (IDPs) and refugees, but the language is even weaker than that in the Georgian AP.]

Only four specific actions are intended to “contribute to the peaceful solution of the conflict”: increased diplomatic efforts; continued support for a peaceful solution; and increased support for the OSCE Minsk Group negotiation process; and likewise for people-to-people contacts. Other sections of the drafts refer to promoting sustained efforts for peace, de-mining, aid for internally displaced persons (IDPs) and refugees, and promoting the active involvement of civil society,133 but the language is even weaker than in the draft offered to Georgia.

133 Draft Elements for Inclusion in an EU/Armenia ENP Action Plan”, 28 December 2005, and “Draft Elements for Inclusion in an EU/Azerbaijan ENP Action Plan”, 23 February 2006. In the Azerbaijani draft these actions are highlighted, meaning they remain under discussion. The Armenian Action Plan points have been agreed.

The primary objective of the European Union as a global actor is poverty reduction, with the complementary aims of promoting good governance and greater respect for human rights in a bid to ensure the stability and security of the countries in the regional context. At the same time, it emphasises the need for a differentiated approach depending on the context and the particular needs of individual states. Thus, as it is mentioned previously, it is of the utmost importance for the EU to define the right “policy mix”. This means that, in the light of the EU’s strategic objectives in external relations, policy coherence needs to be ensured between all available instruments when dealing with a country. This strategy of the Union will help Azerbaijan to achieve the Millennium Development Goals as it was in Georgian case.

The EU’s development policy as expressed in the European Consensus for Development is driven by the primary objective of poverty reduction, with the complementary aims of promoting good governance and greater respect for human rights in a bid to ensure the stability and security of the countries in the regional context. At the same time, it emphasises the need for a differentiated approach depending on the context and the particular needs of individual states. These objectives also apply to Azerbaijan, and will help to achieve the Millennium Development Goals.

It is of the utmost importance to the EU to define the right “policy mix”. This means that, in the light of the EU’s strategic external relations objectives, policy coherence needs to be ensured between all available instruments when dealing with Azerbaijan.

The evaluation suggests that during the first few years, the Tacis programme was mainly governed by a “top-down” approach. This was partly a consequence of the need for institution building in the countries in transition, and partly an insufficient sense of ownership on the part of the national authorities. It is said in the evaluation that National Indicative Programmes (NIPs) tended to be over detailed, which meant they were not flexible enough at project identification level to respond to evolving needs. The main recommendations were integrated into the current 2004-2006 National Indicative Programme, which will be analysed hereafter.

As a result of the evaluations and then recommendations made, the EC will focus in this new programming exercise on defining strategic priorities and objectives rather than specific activities or delivery mechanisms. National authorities are being involved in this process from the very beginning and have shown a greater level of commitment and ownership as a result of the clearer political framework provided by the ENP. It is stated that the EU-Azerbaijan Action Plan adopted on 14 November 2006 goes along these lines. Thus, “future assistance will build on the substantial work carried out to date but aim to increase the impact by making future assistance more integrated and coherent.”193

A Country Strategy evaluation for Azerbaijan was also finalised in 2003. The main recommendations were integrated into the current 2004-2006 National Indicative Programme but they also remain relevant to this new programming exercise.

The evaluation suggests that overall the relevance of the TACIS assistance has been high and it has responded to needs. However, in particular during the first few years, the programme was mainly governed by a “top-down” approach. This was partly a consequence of the need for institution building in the countries in transition and partly due to an insufficient sense of ownership on the part of the national authorities. In the specific case of Azerbaijan this problem seemed less severe than in other TACIS countries. Furthermore, National Indicative Programmes (NIPs) tended to be overdetailed which meant they were not flexible enough at project identification level to respond to evolving needs.

The EC will focus in this new programming exercise on defining strategic priorities and objectives rather than specific activities or delivery mechanisms. National authorities are being involved in this process from the very beginning and have shown a greater level of commitment and ownership as a result of the clearer political framework provided by the ENP. The EU-Azerbaijan Action Plan adopted on 14 November 2006 goes along these lines.

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In the areas of good governance and legal and administrative reform future
assistance will build on the substantial work carried out to date but aim to increase the
impact by making future assistance more integrated and coherent.

Under the abovementioned new strategy, EC assistance will continue to focus strongly on governance-related issues and the regulatory aspects of economic reform. Support for infrastructure development in close collaboration with the EIB, EBRD and other IFIs will be increased further.

Under this new strategy EC assistance will continue to focus strongly on governance-related issues and the regulatory aspects of economic reform. Support for infrastructure development in close collaboration with the EIB, EBRD and other IFIs will be further increased.

Further more, through CFSP the EC has been providing financial support to address the Anti-Personnel Landmines (APL) problem in the context of its Mine Actions and will probably extend its activities once the Nagorno-Karabakh conflict is settled. Other problems to be addressed under this instrument are the small arms and light weapons and Soviet rocket fuel deposits.

The EC has been providing financial support to address the APL problem in the context of its Mine Actions (the 2005-2007 is currently under implementation) and will probably extend its activities once the Nagorno-Karabakh conflict is settled.

Other problems to be addressed in this context are the small arms and light weapons
and Soviet rocket fuel deposits; the latter pose a very serious problem to the
environment.

Originally, the European Neighbourhood Policy has two main objectives: strengthening stability, security and well-being for the EU member states and neighbouring countries, and preventing the emergence of new dividing lines between the enlarged EU and its neighbours.

The European Neighbourhood Policy has two main objectives: strengthening stability, security and well-being for EU member states and neighbouring countries, and preventing the emergence of new dividing lines between the enlarged EU and its neighbours67.

Regions, in which military confrontation is currently practiced (the Middle East) or is maintained by the governments as unavoidable means of statehood, are less attractive for other developed states to create any security arrangement by explicit agreements. Thus, in this case, governments do not agree on any form of collective solution of security problems.

Military alliances are formed on the belief that the coordination of military force with likeminded countries is more successful than self defence in dissuading potential aggressors. Creation of a military alliance means encouraging other countries which do not participate in the latter to build an opposite alliance in order to make a kind of equilibrium of forces. Accordingly, it can be inferred that in many cases military alliances do not improve security condition of the members [sic] states but crystallize conflict relations that make constant or increase instability depending on circumstances.221

221 Attina Fulvio and Rossi Rosa – European Neighbourhood Policy: Political, Economic and Social Issues. The Jean Monnet Centre “Euro-med”, Department of Political Studies, University of Catania, 2004. p.17

In this case, however, governments do not agree on any form of collective solution of security problems. [...] Accordingly, military alliances are formed on the belief that the coordination of military force with likeminded countries is more successful than self-defence in dissuading potential aggressors. When a military alliance is created, in most of the cases the formation of opposite military alliance(s) is very probable because the rise of a strong collective actor incites other governments to unite in opposite alignment(s). For this reason, in many cases military alliances do not improve the security condition of the member states but crystallize conflict relations that make constant or increase instability according to circumstances.

3 This is the case of the regions in which military confrontation is currently practiced (like the Middle East) or is maintained by the governments as the unavoidable means of the state (like in the African sub-regional systems). [...]

It is followed by the collective security system. By the latter, governments prefer to keep armed forces under strict national control but agree to make them available on request as complement to collective force to intervene in case of need against an aggressor (for example the Organization of African Union). This kind of systems of collective security neither leads automatically to the constitution of collective military forces nor to the formation of permanent security mechanisms.

The systems of collective security occupy the centre of the line because with this arrangement, governments prefer to keep armed forces under strict national control but agree to make them available on request, instantly forming a collective force to intervene in case of need against an aggressor. In other words, for the low level of cooperative practices and social integration, national commitment to cooperation neither leads automatically to the constitution of collective military forces nor to the formation of permanent security mechanisms.

The regional security partnership is characterized by the following indicators: measures of cooperative security (information exchange on military policies and structures) and comprehensive security (military and non military aspects of security) are indivisible part of regional security with obligation to improve security conditions in the region and preserve geopolitical stability. They are defined in international agreements. The security partnership agreements are formed by groups of countries characterized by conflict divisions, not large [flows of transactions and communication, and a small sharing of values and institutions.]

Second, in this form of regional security, measures of cooperative security (like exchange of information on military policies and structures) and comprehensive security (i.e. the military and non-military aspects of security) are constitutive means of regional security, and are explicitly defined in international agreements. [...] Third, security partnership agreements, in contrast to security communities, are formed by groups of countries characterized by conflict divisions, not-large flows of transactions and communication, and a small sharing of values and institutions.

[The security partnership agreements are formed by groups of countries characterized by conflict divisions, not large] flows of transactions and communication, and a small sharing of values and institutions. At the same time, it must be declared that there exist some exceptions as well; for instance, countries are not divided by conflict lines, are linked by large flows of mutual transactions and communication, and share the same cultural and institutional values, but they meet consensus on introducing cooperation on security problems. Important is, that for some political and practical reasons, these states are willing to cooperate in order to reduce the risk of violent confrontations, and allow the flow of mutual communication and material transactions to make profit. At last, close cooperation between the states over time produces common orientations towards problems and values, thus, reduces the security culture difference, which leads to the formation of we-ness and common values. So, it is not excluded that a regional security partnership turns into a security community.223

To put it out in a short and precise way, the regional security partnership is a kind of consensus between the countries of a region to cooperate on the reduction of violence and enhancement of stability and peace by making use of different types of agreements and mechanisms like formal security treaties, security international organizations, joint action agreements, multilateral dialogue processes, peace and stability pacts including confidence building and preventive diplomacy measures, also measures for influencing domestic structures and processes of the countries at risk of internal violence.

223 Attina Fulvio and Rossi Rosa – European Neighbourhood Policy: Political, Economic and Social Issues. The Jean Monnet Centre “Euro-med”, Department of Political Studies, University of Catania, 2004. p.18

Third, security partnership agreements, in contrast to security communities, are formed by groups of countries characterized by conflict divisions, not-large flows of transactions and communication, and a small sharing of values and institutions. These conditions apply to the whole group of the countries of the partnership project, but some countries of the group are not divided by conflict lines, are linked by large flows of mutual transactions and communication, and share the same cultural and institutional values. In addition, the countries of the region have different security cultures but these are not so distant from one another as to prevent the formation of consensus on introducing cooperation on security problems. In other words, for some political and practical reasons, these countries are inclined to act together for the reduction of the risk of violent confrontation, and allow the flow of mutual communication and material transactions to increase on their own. Fourth, in as much as security cooperation in a regional partnership becomes strong and durable over time, the observance of common practices by the partner states produces common orientations towards problems and values and, consequently, reduces the security culture difference. On their turn, common practices and orientations lead to the formation of we-ness and common identities of the people of the partner states. Hence, it is possible that a regional security partnership turns into a security community.

In general terms, the regional security partnership is the arrangement that originates from the consensus of the states of a region to cooperate on the reduction of violence and enhancement of stability and peace by making use of different types of agreements and mechanisms like formal security treaties, security international organizations, joint action agreements, multilateral dialogue processes, peace and stability pacts including confidence-building measures, preventive diplomacy measures, and also measures for influencing the domestic structures and processes of the countries at risk of internal violence.

The good examples of the regional security cooperation are: the process of building of the European security system since the launch of the Helsinki Process; ASEAN Regional Forum (ARF) in the East Asia/Pacific; and the Shanghai Cooperation Organization (SCO) in Central Asia. In the fundamental agreements of such security partnerships, shared principles [of peaceful relations are proclaimed and sources of conflict, tension and instability are made public by the partner governments.]

The construction of the European security system since the early Seventies, i.e. from the opening of the Helsinki Process, is the most important case of regional security partnership building in international politics but other current initiatives in Asia – namely in the East Asia/Pacific (i.e. the ASEAN Regional Forum, ARF) and in Central Asia (i.e. the Shanghai Cooperation Organization, SCO) – are examples of this form of regional security co-operation. [...] In the fundamental agreement shared principles of peaceful relations are proclaimed, commitment to avoid power confrontation is given, and sources of conflict, tension and instability are made public by the partner governments.

[In the fundamental agreements of such security partnerships, shared principles] of peaceful relations are proclaimed and sources of conflict, tension and instability are made public by the partner governments. The fundamental agreements include the operative agreements and mechanisms, which are used in order to implement cooperative measures for the management of common security problems. With the operative agreements, multilateral offices are created as well as the use is made of international organizations to deal with perceived security threats. The most important collective instruments of the security partnership are those multilateral offices and organizations, especially, in as much as they are responsible for peace-making and peace-keeping operations.

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This observation reveals that a regional security partnership is based on a set of documents, i.e. one or few fundamental agreements, and a number of related operative agreements. In the fundamental agreement shared principles of peaceful relations are proclaimed, commitment to avoid power confrontation is given, and sources of conflict, tension and instability are made public by the partner governments. Within the frame of the fundamental agreements, the regional states agree to establish also the operative agreements and mechanisms that are needed to implement co-operative measures for the management of the common security problems. With the operative agreements,

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the partner governments create multilateral offices and make use of existing and new created international organizations to deal with the perceived security threats. Multilateral offices and organizations are the most important collective instruments of the security partnership, especially in as much as they are responsible for peace-making and peace-keeping operations.

• Awareness of the countries of the region for independence [sic] and the local effect [sic] of global problems,

• Relaxed or no power competition in the international politics of the region and restrained use of violence in international conflicts.

Conditions

• Consensus of the governments of the region on building security cooperation by reducing violence in international relations, improving international and domestic stability, and promoting peace and economic growth,

• A set of international and internal measures and mechanism [sic] of conflict management and prevention,

• Involvement of extra-regional powers (very probable).

Consequences

• Reduction of the gap between the security doctrines and cultures of the countries of the region,

• Increase of defence de-nationalization,

• Development of security community (possible).

224 Attina Fulvio and Rossi Rosa – European Neighbourhood Policy: Political, Economic and Social Issues. The Jean Monnet Centre “Euro-med”, Department of Political Studies, University of Catania, 2004. p.19

The main attributes of the regional security partnership model are summarized as it follows.

Pre-conditions

• awareness of the countries of the region for interdependence and the local effects of global problems,

• relaxed or no power competition in the international politics of the region and restrained use of violence in international conflicts.

Conditions

• consensus of the governments of the region on building security cooperation by reducing violence in international relations, improving international and domestic stability, and promoting peace and economic growth,

As to definition of security community, Karl Deutsch defines security community as a group of people that have become integrated and consider war as an obsolete instrument of conflict resolution. This group of people consider themselves as a community and produce a favourable ground for the establishment of peaceful conflict resolution institutions. Distinction is made between amalgamated security communities and pluralistic security one. Deutsch argues that by the first case the states have abandoned their full sovereignty and merge into an expanded state; but, by the second one, states retain their legal independence but develop common institutions with a sense of “we-ness”. Adler and Barnett point out two types of pluralistic communities – loosely and tightly coupled – according to whether they are close to giving up the full sovereignty or the vice versa – government centralization.225

Fulvio Attina gives us examples of each community type mentioned above. The formation of federal states like Germany in the 19th century is a good example for the amalgamated security community. Scandinavia, Canada and the United States, and the Euro-Atlantic community are examples of the loosely coupled form of pluralistic security community. The author points out the European Union as an example of the tightly coupled form of security community; but, at the same time, he underlines that the whole European continent is hardly a security community, and the wider Europe with its surroundings “… is [still far from being qualified as a case of this arrangement.”]

225 Attina Fulvio and Rossi Rosa – European Neighbourhood Policy: Political, Economic and Social Issues. The Jean Monnet Centre “Euro-med”, Department of Political Studies, University of Catania, 2004. pp.17-18

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A security community, as initially theorized by Karl Deutsch, is a group of people that have become integrated and consider war as an obsolete instrument of conflict resolution (Deutsch et al., 1957). A security community is brought into being by the high level of transaction and communication flows that bind together a group of people who think of themselves as a community, and produce favourable conditions for the establishment of institutions of peaceful conflict resolution. Deutsch made a distinction between amalgamated security communities, which are formed by the states that

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abandon their full sovereignty and merge into an expanded state, and pluralistic security communities in which states retain their legal independence but develop common institutions and a sense of “we-ness” and “we-feeling”. As Adler and Barnett remark (1998), pluralistic communities vary between two forms - the loosely and tightly coupled form - on whether they are close to persistent state sovereignty separation or emerging government centralization. Therefore, the right-hand part of the line of regional security systems is populated with three forms of arrangements. An example of amalgamated security communities is the formation of federal states like Germany in the 19th century. Scandinavia, Canada and the United States, and the Euro-Atlantic community are examples of the loosely coupled form of pluralistic security community. Finally, the European Union is example of the tightly coupled form of security communities, but the whole European continent is hardly a security community, and the wider Europe and its surrounding area is still far from being qualified as a case of this arrangement.

The latter is aimed at developing a zone of prosperity and a “ring of friends”, with whom the EU can enjoy close, peaceful and cooperative relations. Thus, it is obvious that political and economic interdependence is believed by the Union to be the source of political stability and regional security.

The new policy plan is expressly aimed at developing a zone of prosperity and a ‘ring of friends’ with whom the EU can enjoy close, peaceful and co-operative relations. Political and economic interdependence is recognized as a reality that puts on the European Union the duty to creating an enlarged area of political stability and functioning rule of law.

Within the scope of the abovementioned pledge, the European Commission has provided humanitarian assistance in the immediate aftermath of the conflict in Georgia and started working on a comprehensive assistance package, which will be up to €500 million. The package will cover the period of 2008-2010 and will be subject to review based on the pace of recovery and evolution of the Georgian economy. The main source of the funding is a mix of programmed funds under the ENPI envelope and crisis instruments, such as the Instrument for Stability, ECHO - Humanitarian Aid and ECFIN grants for Macro-Financial Assistance (MFA). The package also includes the costs for the EU (ESDP) Civilian Monitoring Mission in Georgia covered by the CFSP budget.230

In the immediate aftermath of the conflict in Georgia, the European Commission has provided humanitarian assistance and started working on a comprehensive assistance package, which will be up to €500 million. The package will cover the period of 2008-2010 and be subject to review based on the pace of recovery and evolution of the Georgian economy.

The main source of the funding is a mix of programmed funds under the ENPI
envelope and crisis instruments, such as the Instrument for Stability, ECHO -
Humanitarian Aid and ECFIN grants for Macro-Financial Assistance (MFA). The
package also includes the costs for the EU (ESDP) Civilian Monitoring Mission in
Georgia covered by the CFSP budget.